Three weeks into the lame duck period on Capitol Hill, a bipartisan group of House lawmakers has introduced a landmark proposal to enact a national carbon tax, from which all of the revenue would be returned as a rebate to taxpayers and some of their dependents.
Under the Energy Innovation and Carbon Dividend Act, a carbon fee of $15/metric ton (mt) of carbon dioxide equivalent (CO2e) would be imposed in 2019, with the fee increasing by $10/mt every year thereafter. Agricultural fuels would be exempt. Proponents say the fee could help reduce U.S. carbon emissions from 2015 levels by 40% over the next decade, and by 91% by 2050,.
“This aggressive carbon pricing scheme introduced by members from both parties marks an important opportunity to begin to seriously address the immediate threat of climate change,” said Rep. Ted Deutch (D-FL). “The status quo is unsustainable; the time to act is right now.”
Reps. Francis Rooney (R-FL), Brian Fitzpatrick (R-PA), John Delaney (D-MD) and Charlie Crist (D-FL) were co-sponsors of the bill, aka House Resolution (HR) 7173. The bill was referred Tuesday to the House Ways and Means Committee. It was also presented to the House’s Energy and Commerce Committee and the Foreign Affairs Committee to give those panels an opportunity to see what provisions of HR 7173 fall within their jurisdiction.
According to a fact sheet and a copy of the legislation posted on Deutch’s website, taxpayers with a Social Security or federal Tax ID number would receive an equal share of revenue from the carbon tax, while minors would receive a half-share. Two minors per household would be eligible for the rebate.
The first emission reduction target — 5% of emissions from reference year 2015 — would begin in 2022 and continue until 2030. The reduction targets would slide to 2.5%/year from 2030 to 2040, and 1.5%/year from 2040 to 2050.
The American Petroleum Institute (API) told NGI’s Shale Daily that while it has not taken a position on a carbon tax, the U.S. oil and gas industry has invested billions of dollars in technological innovation, efficiency improvements and “cleaner” fuels to address global climate change.
“CO2 emissions in the United States have plunged to their lowest level in a generation, while CO2 emissions around the globe have risen 50% since 1990,” said API’s Kyle Isakower, vice president for regulatory and economic policy. “The bottom line is that natural gas and oil production in America is among the cleanest in the world, and our industry continues to demonstrate that meeting record demand and protecting the environment are not mutually exclusive.”
At first blush, HR 7173 appears to be the first serious effort to enact a national carbon tax since a coalition of veteran Republican officials launched a coalition to pursue one in 2017.
The Climate Leadership Council (CLC), which includes former Secretaries of State James A. Baker III and George P. Shultz, calls for a rising carbon tax that would begin at $40/mt, and for revenues to be distributed to every U.S. citizen in the form of a quarterly check from the Social Security Administration. Corporate founders of the CLC include oil and gas heavyweights BP plc, ExxonMobil Corp., Royal Dutch Shell plc and Total SA.
Still, the CLC expressed support for the latest attempt at a national carbon tax. “It is no coincidence that the first bipartisan climate bill in nearly a decade is based on carbon dividends,” said CEO Ted Halstead. “A carbon dividends plan that returns all revenues to the American people is uniquely capable of appealing to all sides of the climate debate.”
In a twist, environmental groups were divided over the measure.
“This new legislation establishes strong pollution reduction goals and harnesses the power of the market, letting businesses choose for themselves how to cut pollution,” said Environmental Defense Fund spokesman Nat Keohane. “The bill is also designed to drive investment and innovation in new, better and faster ways to cut emissions.”
However, Food & Water Watch Executive Director Wenonah Hauter said “carbon pricing schemes like this one are false solutions to climate change, and they provide a dangerous distraction from the bold policies required to avoid the worst effects of climate chaos in decades to come. This carbon tax bill amounts to climate denial, not climate action.”
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