Clean Power

Published on March 13th, 2013 | by Andrew


House, Senate Democrats Introduce Carbon Pricing Discussion Draft

March 13th, 2013 by  

Members of Congress on March 12 introduced draft carbon-pricing legislation that would require those responsible for large amounts of carbon dioxide and greenhouse gas emissions to pay for the pollution they produce.

Introduced by House Representatives Henry Waxman (D-CA), Earl Blumenauer (D-OR), Senators Sheldon Whitehouse (D-RI), and Brian Schatz (D-HI), the “discussion draft” would require the nation’s largest polluters to pay a fee for each ton of carbon emissions they release. Assessment of carbon fees would be based on EPA’s database of reported emissions, with the Treasury Department responsible for collection and handling.

“Putting a price on carbon could help solve two of the nation’s biggest challenges at once: preventing climate change and reducing the budget deficit,” Congressman Waxman was quoted in a press release.

“There have been carbon tax proposals made by others. What’s unique about this one is its novel design. We are seeking to craft a system in which each agency does what they are good at and that minimizes compliance burdens and administrative costs. Utilities, oil companies, and other major sources are already reporting their emissions to EPA. We build off of this existing program.”

Image Credit: Guy Gorek

Image Credit: Guy Gorek

Taxing Carbon Emissions: Which Model is Best?

Viewed as regressive, imposing what amounts to a tax on carbon emissions would likely impact lower income Americans directly or indirectly more than the wealthy. The devil’s in the details, however.

Various proponents have proposed alternative carbon tax plans that would lighten the burden on citizens by redistributing carbon tax revenues. Variations on the theme include redistributing carbon tax proceeds broadly across lower-income US households; using them to fund renewable energy, energy efficiency, and infrastructure projects; and allocating them to federal government deficit reduction.

In contrast to carbon “cap and giveaway” and “cap and auction” models, the so-called carbon “cap and dividend” or “Skytrust” carbon trading model entails carbon emission permits being sold and the resulting revenue redistributed to citizens in the form of equal dividends rather than collected and allocated by the government.

Keeping the part about redistributing carbon tax revenue equally across the population, the carbon fee-and-dividend model would do away with the carbon emissions permits and market aspects, replacing them with a straightforward tax on emissions.

Addressing Troubling Trends

Some supporters believe that imposing a tax on carbon emissions can not only help lower the federal deficit, improve environmental health and safety, and stimulate clean energy jobs and green economic growth, but redress troubling socioeconomic and political trends that have been developing over the past three decades. Prominent among these are growing inequality in income and wealth, political representation, and economic and educational opportunity.

In a press statement, Green for All CEO Phaedra Ellis-Lamkins applauded the House members and Senators for working with a variety of stakeholders and introducing the discussion draft.

“For too long, big polluters have gotten away with passing their costs along to the rest of us in the form of poisoned air and water, health problems, and economic stagnation. Low-income communities and people of color have shouldered an especially heavy burden from pollution-related illness and increased vulnerability to climate disasters. It’s time to change the game.

“Putting a price on carbon pollution is a single elegant solution that could solve a number of our most pressing problems. By making polluters pay, we can prevent devastating cuts to the programs that keep America running, like schools and emergency services.

“A carbon fee would slash pollution and spur investment in clean energy technology, which creates three times as many jobs per dollar spent as fossil fuels.

“We need to make sure that the revenue generated supports the kind of green innovation that will create good, healthy jobs for more Americans. We need to make sure the folks on the front lines of climate change—like people of color, low-income communities, and coal and oil workers—are among the winners as we transition to a clean energy economy.”

Seeking Public Feedback

The proposed legislation’s sponsors are on the same page. “For far too long, carbon polluters have pushed the true cost of their pollution onto the American people in the form of dirty air, acidified water, and a changing climate,” Sen. Whitehouse stated.

“This framework is the beginning of a collaborative process to craft legislation that will reduce carbon pollution while also upholding an important principle: that all of the revenue generated through this carbon fee will be returned to the American people.”

Now open for a one-month period of public comment, the draft carbon-pricing legislation’s sponsors are looking for comment and feedback specifically on the following:

  • What is the appropriate price per ton for polluters to pay? The draft contains alternative prices of $15, $25, and $35 per ton for discussion purposes.
  • How much should the price per ton increase on an annual basis? The draft contains a range of increases from 2% to 8% per year for discussion purposes.
  • What are the best ways to return the revenue to the American people? The discussion draft proposes putting the revenue toward the following goals, and solicits comments on how to best accomplish each: a) mitigating energy costs for consumers, especially low-income consumers; b) reducing the Federal deficit; c) protecting jobs of workers at trade-vulnerable, energy intensive industries; d) reducing the tax liability for individuals and businesses; and e) investing in other activities to reduce carbon pollution and its effects.
  • How should the carbon fee program interact with state programs that address carbon pollution?

“Let’s send a signal to big polluters that it’s past time to start putting a price on carbon pollution,” Rep. Blumenauer was quoted as saying.

“This proposal has a great deal of potential to help protect the environment, reduce the deficit, create jobs, and support the transition to clean energy sources and low carbon transportation options. I look forward to working with my colleagues and seeking feedback on how best to use the revenue and ensure that the program is administered in a fair and equitable manner.”

“I am proud to join Congressman Waxman and Senator Whitehouse in supporting a carbon pollution fee that will help protect our health and economy,” Sen. Schatz added. “By reducing carbon pollution, this proposal would drive real action in combating climate change and improving air quality. Hawaii is a national leader in clean energy and efforts to reduce climate change, and a carbon fee will support that good work.”

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About the Author

I've been reporting and writing on a wide range of topics at the nexus of economics, technology, ecology/environment and society for some five years now. Whether in Asia-Pacific, Europe, the Americas, Africa or the Middle East, issues related to these broad topical areas pose tremendous opportunities, as well as challenges, and define the quality of our lives, as well as our relationship to the natural environment.

  • Tom G.

    The first paragraph of this article caught my attention since If I must support something; I prefer a Carbon Tax over some form of Cap and Trade.

    The second paragraph raised my concern since I didn’t see a single republican in support of the discussion draft.

    The third paragraph reveals that this is just another regressive and punitive tax that will be used to grow government and in my opinion we have more than enough government now.

    1. Comments about first paragraph. I support a Carbon Tax [CT] because I believe it is the most direct and easiest tax to collect and to follow where the money is going. Programs like Cap and Trade or Cap and Tax for example have worked in some instances but many programs are riddled with inefficiencies and waste or favor some group of individuals or industries over others. When you give your dollars to a government agency; you will never receive a 100% return of that money in some form of government services.

    2. Second paragraph comments. Things get done in Washington by individuals reaching consensus [agreement] and there hasn’t been a whole bunch of that taking place in the last few years. It is my belief that this discussion draft will end up in someones trash basket unless both parties find ways to compromise.

    3. Deficit reduction was listed as a goal of this program by implementing a Carbon Tax. That one statement alone makes me AGAINST this discussion draft. OUR government deficit has grown because WE THE PEOPLE have allowed it to grow. You reduce a deficit by reducing spending or increasing income. There is nothing complex about two column accounting. As the title states, the purpose of a Carbon Tax is to punish those who use carbon to create energy. Coal, oil, natural gas, etc are typical carbon sources. But I didn’t seen anything about WHEN we are going to tax the carbon. Is it at the coal mine, the coal burning power plant or at the electric meter on our homes? Is it at the steel plant or at the car dealership based on the weight of the vehicle we purchase.

    Anyway here is my opinion.

    1. A Carbon Tax [CT] does not create wealth or help the majority of
    the American people. It in fact robs the people of needed
    funds by increasing the cost of energy at a time when we should be
    doing exactly the opposite.
    2. A CT is perceived by many Americans as just another
    tax to help create a bigger government and/or to line the pockets of
    a select group of individuals or corporations.
    3. A CT does not create a larger workforce who pay taxes but does the exact opposite by removing needed capital from the private investment sector which is needed to build the renewable energy systems valued by our President and a majority of the American people and;
    4. A CT is not a product; you can’t eat it, the public can’t spend or save
    it, you can’t drive it or plant it in the ground and watch it grow.

    However, since Congress does not appear to be capable of doing much of anything constructive for our country; I might support a Carbon Tax if the governments TAKE was limited to some reasonable number like 10% of the collected tax. In my opinion, a Carbon Tax should be used to REDUCE CARBON not pay down government debt caused by inappropriate government spending. That’s my opinion and I am sticking to it.

  • Kevin Adams

    The EPA estimates the average yearly CO2 emissions from a 2-axle, 4-wheel vehicle is 4.8 tons per vehicle per year (at 21.6 mpg). That would equate to $168/year for the $35 price point. Low income households would certainly benefit from receiving a percentage of this carbon tax.

    A sizable portion should also go to fund renewable technology. As the market effects of a carbon tax take hold, more individuals and businesses will switch to carbon neutral products and services, and the carbon tax proceeds will slowly shrink as renewable tech grows.

  • jburt56

    $600 billion per year for defense / 133 billion gallons of gas = about $4.50 per gallon war gas tax.

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