News & Politics

GOP Rep. to Introduce Carbon Tax Legislation

(AP Photo/Rich Pedroncelli, File)

Rep. Carlos Curbelo says he will introduce legislation next week that would create a $23-per-ton tax on carbon emissions from oil refineries, gas processing plants and coal mine mouths beginning in 2020.

The bill would also severely limit the ability of the EPA to regulate industry emissions.

E&E News:

Industrial sectors such as cement, aluminum, steel and glass would also pay the fee for emissions stemming from physical or chemical reactions outside of energy production. Sources said Curbelo’s office was shopping that version of the bill last week.

The tax would escalate 2 percent above inflation annually. If the decline in emissions fails to reach certain levels, the carbon tax would increase by an additional $2 per ton the following year.

Modeling, which the draft text notes is “still under development,” suggests the plan would reduce fossil fuel emissions 24 percent below 2005 levels in 2020, and 30 percent below 2005 levels in 2032. For comparison, former President Obama’s target under the Paris climate accord was 26 to 28 percent below 2005 levels by 2025. President Trump has said the United States will withdraw from the climate pact.

The draft bill attempts to strike a compromise between environmental and Democratic advocates of greenhouse gas reduction policies and a growing number of center-right organizations that promote a carbon tax as a conservative solution to climate change.

It would halt — but not kill — EPA regulations on greenhouse gas emissions so long as the tax meets its goals to cut carbon emissions. The draft legislation contains check-in points in 2025 and 2029 to consider reinstating regulations if the tax hasn’t curbed enough greenhouse gases. The moratorium would sunset after 2033 if emissions goals are met. That provision is meant to address concerns from Democrats and environmental groups, which generally oppose forfeiting EPA’s authority to regulate carbon in exchange for a carbon tax.

The bill doesn’t have a chance of passage in the House and there are no plans for any similar bill to be introduced in the Senate. On top of that, the House is considering a resolution which will probably pass that calls carbon taxes “detrimental” to the economy.

But there is the germ of an idea in this bill that might be useful in the near future. The Highway Trust Fund is going broke. Vitally needed road and bridge repairs across the country are not being performed because proceeds from the gas tax, which is the current funding mechanism for the fund, have been falling steadily in recent years due to more fuel-efficient cars and people driving less.

Another way must be found to fund these infrastructure projects. Most of the revenue gained from a carbon tax would go into the fund:

The draft bill does accomplish a goal of center-right groups by eliminating a tax — a so-called tax swap. But critics note this isn’t a one-for-one offset, because it would increase revenue for the federal government. It’s designed to fix the flagging gas tax, which has failed to keep up with highway repairs as vehicle efficiency has increased, motorists drive fewer miles and more people move to urban settings.

Seventy percent of the revenues would flow to the Highway Trust Fund, according to the draft.

“Revenue neutrality has not been demonstrated to be the carrot for politicians like many people thought it would be,” Majkut said.

The draft also says the tax should be “border adjustable,” meaning fees could be assessed on imported products from countries without a carbon tax.

The federal government is toying with the idea of installing a monitoring device in all vehicles and assessing a tax based on how much you drive. Most would agree a carbon tax, while unpalatable, would be a superior means of raising revenue than having the government spy on us.

The only certainty is that something has to be done. A carbon tax in exchange for less EPA enforcement on emissions may be the start of a tradeoff that would be politically viable someday.