Democrats in Congress Propose "Carbon Tax"; GOP Responds

19 March 2013 Renewable Energy Outlook Blog

On March 12, Senators Waxman and Schatz and Representatives Waxman and Blumenauer introduced a “draft” bill that would require pollution emitters to pay a fee for each ton of pollution they release into the environment. The proposal by the four Democratic Congressman, referred to by some as a “carbon tax”, is described by its authors as a “discussion draft” and seeks input on the potential legislation from the public and potentially affected parties. Under the proposal, the amount of pollution subject to the fee would be determined using the EPA’s database, and collection of the fees would be the task of the Treasury Department.

In the draft bill, the legislators specifically request feedback on the following questions:

1. At what level should the per-ton payment be set? The draft describes possible per-ton price levels of $15, $25 and $35.
2. What annual escalator should be applied to the per-ton price levels? The draft contains a range of possible annual increases from 8% to 10%.
3. What should the revenues raised from the program be used for? The draft describes a number of possible uses for the new funds, including reducing the deficit and investing in other activities designed to reduce carbon pollution and its effects.
4. How should the carbon fee program interact with state programs that address carbon pollution?

Members of the public are invited to submit comments on the draft bill to cutcarbon@mail.house.gov. The comment period expires April 12, 2013. The full text of the “discussion draft” of the bill can be found here.

Promptly following release of the draft bill, GOP Representatives Scalise and Barton introduced a resolution opposing any fee imposed on carbon emissions or “carbon tax”. Arguments against such a fee include a general reluctance to impose new costs on business with the national economy in a fragile condition, and the idea that the environmental benefits of such a fee would be negligible due to increased pollution from other countries with less stringent environmental regulations such as China and India. It should be interesting to see what comments are submitted in response to the discussion draft, and whether an actual bill ends up being proposed during the current Congressional session.

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