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Carbon Pricing

US Carbon Tax Bill Attracts Interest Of Republicans

Originally published on Carbon Pulse
By Mike Szabo

A proposal to introduce a revenue-neutral carbon tax in the US is attracting interest from some corners of the Republican party, and the two Democratic senators who authored the bill are confident they’ll soon sign up a sponsor from the other side of the Congressional aisle.

solar-power-wind-power-clean-energy-private-equity-investment-firm-moneyThe lawmakers admit that the bill, based on the ‘carbon tax-and-dividend’ concept, has little chance of passing the current Senate, but the concept could eventually be the policy most agreeable to Republicans, possibly if coupled with other levers such as the repeal of President Obama’s Clean Power Plan.

The American Opportunity Carbon Fee Act, unveiled by Senators Sheldon Whitehouse (D-RI) and Brian Schatz (D-HI) in June at the American Enterprise Institute, a right-wing think-tank, seeks to impose a $45/metric tonne tax in 2016, rising annually at a rate of inflation plus 2%.

Nearly all Republican lawmakers, if not questioning the legitimacy of man-made climate change, are against the idea of introducing a carbon tax, arguing it would lead to massive job losses while burdening consumers.

But the bill’s authors, speaking on the sidelines of the UN climate summit in Paris on Friday, said they are nearing agreement with at least one potential Republican sponsor.

“We have several people specifically in mind, but I want them to go through with it so I don’t want to mention their name until we get them on board,” Schatz told Carbon Pulse.

The fee would apply to fossil fuels, producers and importers of potent industrial gases, and GHGs from other non-fossil sources, and it would be accompanied by border adjustments to protect US-based manufacturers of energy-intensive goods.

The revenue collected would then be channeled back to consumers via an inflation-adjusted $500 tax credit, while providing extra assistance to veterans, retirees, the disabled, low-income and rural households, and workers transitioning away from heavy-emitting industries to new, cleaner sectors.

In addition, to attempt to get the business lobby and some Republicans on board, the proceeds would also go to reducing the country’s top marginal corporate tax rate to 29% from 35%.

“It’s not how I’d prefer to use the revenue, but the reason we configured it that way is to attract bipartisan support,” Schatz said, adding that it’s unrealistic that the bill will be passed by a Senate controlled by Republicans under the helm of Kentucky’s Mitch McConnell.

The idea of a so-called ‘carbon tax-and-dividend’ regime is also being touted by other former congressmen, including Bob Inglis (R-SC) through his Energy and Enterprise Initiative, and Walt Minnick (D-ID) through The Partnership for Responsible Growth.


Another potential sweetener for Republicans could come in the form of the legislation being coupled with a repeal of other environmental regulations, namely President Obama’s Clean Power Plan to curb emissions from new and existing power plants.

Obama strategically chose to use his legal powers as President to introduce the measure, rather than attempting to cultivate it through Congress – the graveyard for a number of legislative efforts to fight climate change over the past 15 years.

“Congress is certainly a lagging indicator when it comes to these issues, but the American public is increasingly going to demand that both parties participate in the [climate] policy conversation, and there are some pretty thoughtful Republican business thinkers and think-tanks that want us to move forward with a revenue-neutral carbon fee.  They see this as an elegant market-based solution, but they will have to do the spadework on the Republican side.  We’re not there yet but we’re more hopeful than we were just six months ago,” Schatz said.

One of those think-tanks is the AEI, which Whitehouse has said was chosen as the launch venue to show that the bill had “conservative cred.”

“There is considerable discourse on the Republican and conservative side about what the best solution is to the climate problem, it’s unanimous that it’s going to be a revenue-neutral fee on carbon,” Whitehouse told Carbon Pulse.

“At present, the unfortunate influence of the fossil fuel lobby on Congress has prevented them from coming to term with this problem, but we know that when they do, the place they’re going to go is where every Republican that has looked at this has gone, and that’s to a revenue-neutral carbon fee.”

“I don’t think it’s going to be long until the realities of this issue overwhelm their politics.”

Reprinted with permission.

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