Two US senators are introducing a bill to tax carbon emissions from fossil fuels, they said, using an event hosted by a right-wing Washington DC-based think-tank to announce their plan.
Democrat senators Sheldon Whitehouse of Rhode Island and Brian Schatz of Hawaii unveiled their bill at the American Enterprise Institute (AEI) on Wednesday evening and promoted its purported economic benefits in an attempt to appeal to Republican lawmakers, many of whom refuse to support any legislation geared at fighting climate change over fears it will cripple the US economy.
Under the bill, the tax would start at $45 per short ton of CO2 emitted in 2016, and rise annually at the rate of inflation plus 2% until the US had cut its output by 80% below 2005 levels. The senators estimate that the tax would reduce US emissions by 40% below that benchmark within 10 years.
The bill also seeks to introduce border levies on imports from countries that don’t price carbon, and to refund any retaliatory taxes imposed on American companies exporting to those countries.
Whitehouse and Schatz said the revenues collected through the tax could be used to ease the regulatory burden on US businesses, cut both corporate and income tax rates, and potentially help reform the country’s complicated tax code.
The pair predict the tax would raise $2 trillion over the next decade, $750 billion of which would go back to consumers and $400 billion of which would trickle to retirees in the form of additional social security benefits.
The senators argue that the absence of a carbon tax is effectively a $700 billion-per-year subsidy to the US fossil fuel industry because those companies are not being forced to cover the social costs of greenhouse gases.
“A carbon fee can repair that market failure by incorporating unpriced damage into the costs of fossil fuels. Then the free market – not industry, not government – can drive the best energy mix for the country, with everyone competing on level ground,” Whitehouse said, according to local media.
However, critics noted that the bill would raise the cost of imported goods for US consumers, place the heaviest financial burden on the poorest households, and punish the least developed countries by making their exports more expensive for Americans.
If passed, the law could replace the EPA’s President Obama-backed Clean Power Plan.
However, while the so-called ‘cap-and-dividend’ concept is gaining supporters, including Marty Feldstein, a Harvard economics professor and former chief economic advisor to President Ronald Reagan, observers said the Whitehouse and Schatz bill’s passage through the Republican-controlled Congress is highly doubtful.
The news comes 10 days after six of Europe’s biggest oil and gas companies said they wanted to work with governments to craft a global carbon pricing system – an undertaking that was cold-shouldered by two US oil majors.
By Mike Szabo – email@example.com