A Group of Big Businesses Is Backing a Carbon Tax. Could It Be a Solution to Climate Change?

The long list of big companies backing a carbon tax as a solution to climate change grew this week with financial giant J.P. Morgan Chase & Co. endorsing a legislative plan billed as a centrist approach to reducing emissions.

The announcement comes as the Climate Leadership Council (CLC), the organization behind the proposal, which was first released in 2017, redoubles efforts to promote the plan before an expected introduction in Congress as the conversation around various climate solutions heats up in Washington.

The CLC announced new backers—including former Energy Secretary Ernest Moniz and former UN climate chief Christiana Figueres—and released internal poll numbers showing bipartisan voter support for the plan. Supporters now include a broad coalition of companies, from oil giants like ExxonMobil to tech behemoths like Microsoft, major environmental groups like Conservation International, and a range of economists and political leaders.

“The markets can and will do much to address climate change,” David Solomon, CEO of Goldman Sachs, a founding member of the CLC, told TIME in an emailed statement. “But given the magnitude and urgency of this challenge, governments must put a price on the cost of carbon.”

The thinking behind the plan is straight forward. Economists have long argued that a carbon tax, which makes companies pay for what they pollute and gives them an incentive to stem carbon emissions, is the most efficient way to reduce such emissions. But carbon tax proposals have been met with opposition in the past from across the political spectrum, including from some Democrats, in large part because they increase energy costs. The CLC proposal would give the money collected by the tax back to taxpayers in the form of a quarterly dividend, an effort to make it more politically palatable.

On Feb. 13, the CLC provided additional details about the plan, including introducing a new mechanism that would rapidly increase the price on carbon if targets are not met. Backers say the plan will cut U.S. emissions in half by 2035. “We think it has a compelling economic logic,” says Janet Yellen, the former chair of the Federal Reserve and a backer of the plan, in an interview.

But despite the growing coalition, actually passing the plan remains a challenging uphill battle. While more and more Republicans have stopped denying the science of climate change, many continue to insist that they would never support anything resembling a carbon tax. Meanwhile, many leading Democrats, including presidential candidate Senator Bernie Sanders of Vermont, have downplayed the role a carbon tax might play in future climate legislation. Many Democrats argue that the time has passed for such a market-driven approach to climate change, arguing that it is too little, too late and that a corporate-backed plan shouldn’t be trusted.

Still, big corporations increasingly see a carbon tax—especially a proposal like the CLC plan—as the simplest solution to a thorny problem. With clear science, activists in the streets and voters experiencing extreme weather events in their own backyards, business leaders see new climate rules as all but an inevitability, if not at the U.S. federal level then in states or other countries where they have operations.

The CLC proposal offers a business-friendly approach: nixing many existing climate regulations, a “border carbon adjustment” that would create a fee on imports from countries without a carbon price, and a dividend system that pays out the revenue collected by the carbon tax back to taxpayers. “If we do one without the other,” says Shailesh Jejurikar, CEO of Procter & Gamble’s Fabric & Home Care division, “it doesn’t work.”

Still, even as more than a dozen Fortune 500 firms support the legislation, many other businesses and influential business groups continue to either oppose a carbon tax or haven’t taken a position at all. That’s particularly true of the fossil fuel industry’s trade groups like the American Petroleum Institute, which officially has no position. Even though major oil companies like ExxonMobil and Shell have joined the CLC initiative, independent oil companies, oil refiners and other related companies remain largely opposed.

One of the biggest challenges to this measure—or any carbon tax for that matter—is the growing interest in other approaches to climate legislation. Republicans this week pushed legislation to plant trees and expand tax incentives for capturing carbon, measures that wouldn’t match the scale of the challenge but allow Republicans to offer a different message on the issue. Earlier this month, Representative David McKinley, a Republican from West Virginia, and Kurt Schrader, an Oregon Democrat, called for legislation that would lead to an 80% reduction in emissions from the power sector by 2050 using a combination of regulation and funding for innovation and infrastructure. And more than 30 Democratic senators introduced a bill to require the Environmental Protection Agency to come up with a plan for the U.S. to eliminate its carbon footprint by 2050. “This is the quickest way we can jumpstart government-wide climate action,” Senator Tom Carper of Delaware, who introduced the legislation, said on the Senate floor.

None of these measures are likely to become law anytime soon, and any legislative approach to addressing climate change will involve intense debate on Capitol Hill.

Even some backers of the carefully crafted CLC plan acknowledge it’s not likely to pass in its current form. “Inevitably, Congress will have some of its own ideas in terms of the implementation,” Moniz, who endorsed the CLC proposal this week, tells TIME.“ “I would welcome seeing that negotiation start in earnest.” Indeed, even having a discussion in Congress indicates a new climate for climate in Washington.