A small group of Democratic and Republican House lawmakers introduced Tuesday night the first bipartisan carbon tax legislation in nearly a decade as a way to combat climate change.
Rep. Ted Deutch of Florida, the Democratic co-chair of the bipartisan Climate Solutions Caucus, unveiled the bill along with fellow members of the group, Reps. Francis Rooney, R-Fla., Brian Fitzpatrick, R-Pa., Charlie Crist, D-Fla., and John Delaney, D, Md.
“We are taking a monumental step forward in showing our colleagues and the country there is a bipartisan solution to climate change that addresses risks to our health, environment, and economy and puts a price on pollution to end our reliance on carbon,” Deutch told reporters on a press call.
Despite its poor chances of passage anytime soon, the new bill represents an increasing willingness from at least some Republicans to address global warming and risk the wrath of many conservatives who view any form of carbon pricing as a tax increase.
It is the second major carbon tax bill introduced by a Republican this year, after Rep. Carlos Curbelo of Florida, the GOP co-chair of the Climate Solutions Caucus, introduced national carbon pricing legislation in September without Democratic help.
Many economists say a carbon emissions tax is the most cost-effective way to fight climate change, because it raises the price of carbon-intensive products based on the damage they cause society — so consumers use less of them — and encourages producers to switch to cleaner alternatives if doing so costs less than paying the tax.
The new bipartisan bill is intended as a testing ground for a carbon-fee-and-dividend model that distributes all of the revenue from the tax into equal portions in the form of a monthly rebate to American households, protecting them from higher energy costs.
Low- and middle-income households would receive more in rebates than they pay in taxes, the bill’s authors say, while high-income households would pay more than they receive.
Free-market groups have been promoting a similar approach in recent months, with the backing of some oil and gas companies, viewing it as the most realistic way for Republicans to come on board, because it is revenue-neutral by not allowing the government to spend proceeds of the tax. By contrast, Curbelo’s bill would spend the money, mostly on improvements to America’s infrastructure.
“This bipartisan bill shows you ambitious climate plans don’t have to grow the government,” Joseph Majkut, climate policy director for the Niskanen Center, a free-market think tank, told the Washington Examiner.
The new bill would impose a tax of $15 per ton of carbon dioxide in 2019, a relatively low starting number. But the price would increase $10 each year, a rapid pace, rising to nearly $100 per ton by 2030, and potentially higher if the emissions targets set in the bill are not met.
It levels the carbon tax primarily on producers of fossil fuels at the “upstream” level of the economy, meaning coal is taxed at the mine, natural gas at the processing plant, and petroleum at the refinery. The legislation exempts agricultural fuels.
It also creates a border carbon adjustment, forcing exporting countries to pay a fee on carbon-emitting products coming into the U.S., to avoid harming the competitiveness of American industries.
Like the Curbelo bill, the new proposal restricts the ability of the government to regulate greenhouse gases under the Clean Air Act, which would be duplicative with a carbon tax.
Noah Kaufman, an economist at Columbia University’s Center on Global Energy Policy, released a report Tuesday night that projected the higher carbon tax rates of the new bipartisan proposal would lead to larger carbon emissions reductions, and greater use of solar, wind, and nuclear energy — virtually eliminating coal from the electricity system by 2030.
The bill’s authors say the legislation would reduce U.S. carbon emissions 45 percent by 2030 compared to 2015 levels, and 80 to 90 percent by 2050, well beyond the pace of the Obama administration’s target under the Paris climate agreement that President Trump rejected.
Kaufman predicts that the new legislation, like Curbelo’s, would cause little damage to the overall economy, slightly reducing GDP by less than 1 percent.
“If you’re looking for a policy that will be unambiguously positive for the U.S. economy, in all years, you are putting up a standard that no reasonable policy will meet,” he told the Washington Examiner.
That metric, however, does not account for the health or economic benefits associated with reduced air pollution and limiting climate change.
“If you are changing the tax code, you are going to have an economic impact,” Majkut said. “But because the risks of climate change are really large and compelling, there is a good case to be made the benefits exceed the small but significant costs.”
Despite the inclusion of Republicans, and outreach to them, it’s unlikely the new bill or any carbon tax legislation can pass Congress in 2019.
Some conservatives who support action to combat climate change would prefer a different, slower approach that has policymakers continuing to offer incentives to invest in clean energy and provide funding to research and deploy new technologies.
“We have seen a carbon tax and cap and trade before, and these are not politically viable at this time,” Heather Reams, managing director of Citizens for Responsible Energy Solutions, a conservative group, told the Washington Examiner. “Maybe we don’t have to go after the whole enchilada right now. We start incrementally and have to realize where we are.”
But recent reports by the United Nations, and the federal government, say policymakers worldwide must set comprehensive policy like a carbon tax to avoid the worst consequences of climate change.
“If we don’t change course by 2030 we the miss point of avoiding runaway climate change,” Deutch said.
