A new carbon tax bill proposed on Monday would create a moratorium on enforcement of Clean Air Act regulations, but would still allow lawsuits aimed at holding the fossil fuel industry liable for climate change-related damages.
The Market Choice Act, introduced by Rep. Carlos Curbelo (R-Fla.) and co-sponsored by Rep. Brian Fitzpatrick (R-Penn.), outlines emission reduction goals and proposes the establishment of a temporary performance-based moratorium on enforcing Clean Air Act regulations in exchange for meeting those goals. The bill also calls for a repeal of the federal gas and diesel taxes.
Unlike another plan that has drawn backing from the fossil fuel industry—the Baker-Schultz plan—Curbelo’s bill does not discuss any waiver of climate liability suits and fossil fuel companies could still be held accountable for climate-related damages.
Any carbon tax faces long odds of being passed by the current Congress. Last week, the House passed a resolution sponsored by House Majority Whip Steve Scalies (R-La.) condemning a carbon tax. Only six Republicans – including Curbelo – voted against the resolution. Forty-one conservative groups signed a letter supporting it.
Curbelo, whose south Florida constituents are grappling with the effects of climate change, acknowledged the bill will be quickly denounced by many, but said he hopes critics instead offer constructive criticism that will lead to future legislation.
“It [the bill] will spark an important debate about investing in our country’s infrastructure, the way we tax and what to do to protect the environment,” said Curbelo, adding that he believes that one day his bill or similar legislation will become law.
The plan starts with an initial tax of $24 per ton on carbon emissions and includes a 2 percent increase annually. The heads of the EPA and Treasury Department would meet every 2 years to determine if goals for the previous years have been met. A provision allows for higher increases if intermediate goals have not been reached.
Long-term goals of the bill are to reduce emissions from fossil fuel combustion and additional emissions from non-fossil fuel sources, relative to 2005 levels, by 27-32 percent by 2025 and by 30-40 percent by 2032. If the goals are met, the moratorium on enforcement of Clean Air Act regulations would expire in 2033.
The bill calls for 70 percent of the revenue to go to the Highway Trust Fund, which will replace revenue lost by the elimination of the federal gas tax. The Highway Trust Fund finances the bulk of the federal government’s spending for highways and mass transit.
Other proceeds would go to a state grant program for low-income households and to help fund projects dealing with chronic coastal flooding mitigation and adaptation.
Smaller amounts are slated to go toward emissions reduction research, reforestation, environmental incentives programs, mine cleanup, weatherization and conservation programs. An assistance fund for displaced energy workers would also be created.
Bob Perciasepe, president of the Center for Climate and Energy Solutions and former deputy administrator of the EPA, said the Market Choice Act offers Congress an excellent starting point for crafting a market-based solution.
“It demonstrates the potential fiscal benefits of a carbon price, protects low-income families, and offers a promising way to balance pricing and regulatory approaches to ensure strong climate benefits,” Perciasepe said.
Dr. Andrew Steer, president and chief executive of World Resources Institute, a global research agency, said the bill brings renewed hope for bipartisan cooperation on climate change.
“This bill reflects the growing understanding that we can address dangerous emissions and at the same time generate revenue that can be used to strengthen the nation,” said Steer, adding that climate impacts are increasing and do not distinguish between political parties.
The Columbia Center on Global Energy Policy Center, which last week released a series of carbon tax studies, conducted an independent analysis of the impacts of Curbelo’s bill and predicted it will lead to economy-wide net greenhouse gas emissions reductions. Those reductions, the studies say, would outpace the United States’ promised commitments to the Paris climate agreement.
The center’s analysis predicts that crude oil production will not be significantly affected and fuel prices will increase by less than 10 cents per gallon. Natural gas production is expected to initially increase slightly, then fall below current production by 2030. Coal production is expected to continue to fall.
Kate Gordon, a fellow at the Columbia Center and vice chair of climate and sustainable urbanization at the Paulson Institute, said a highlight of the plan is that it returns 10 percent of the proceeds to households who might end up paying more under the plan.
“It essentially offsets all of the higher energy prices to those households, so it makes them whole,” said Gordon, who added that it’s important to note that Curbelo’s plan doesn’t return all proceeds, as some plans have proposed, including Baker-Schultz.
Gordon said electricity prices under the plan are predicted go up about 8 percent, but the amount consumers pay will likely go down because of increased energy efficiency.
“Sometimes just looking at the cost is not that relevant when it comes to what most people pay attention to. Most people cannot tell you their kilowatt hour cost, but they can tell you how much their bill is,” she said, adding that most consumers will not see an increase in the amount they pay.
The proposal also includes the creation of a National Climate Commission that would “set goals for emissions reductions that reflect the latest scientific findings of what is needed to avoid serious human health and environmental consequences of a changing climate.”
Curbelo said his south Florida district is already facing many impacts from climate change: rising sea levels, chronic coastal flooding, threats to drinking water from saltwater intrusion in the Everglades and ocean acidification that damages coral reefs and threatens the livelihoods of fishermen and charter boat captains.
Gordon said increasingly severe climate impacts are prompting legislators like Curbelo to approach the need for climate solutions with a renewed urgency.
“I just think it’s an interesting moment where that physical impact piece is really bringing this issue to the fore, whether it’s wildfires, sea level rise, storms; it’s what people are starting to pay attention to across the aisle because it’s very local and very specific and very immediate,” Gordon said.
Curbelo implored his colleagues to work together to preserve the planet and to protect future generations.
“I remind my conservative colleagues who often decry our nation’s growing debt that saddling young Americans with a crushing environmental debt—meaning an unhealthy planet where life is less viable—is at least as immoral as leaving behind an unsustainable fiscal debt,” Curbelo said.