Carbon Pricing Morphs and Republicans Return
Posted: March 10, 2020
The evolution of carbon pricing in the U.S. continues, but we’re still not seeing Federal bills pass. There are eight carbon pricing proposals currently before Congress – seven for some form of carbon tax (or fee) and one called “cap and dividend” (cap and trade). Like in previous Congresses, the chances of any of them even getting out of committee looks pretty slim.
Carbon tax proposals are starting to look a bit more like cap and trade. All eight of the carbon tax proposals allow for offsets for carbon capture and sequestration in the form of rebates, refunds, or tax breaks. Offsets were until recently most common to cap and trade; they are critical to provide market incentive to draw greenhouse gases out of the atmosphere. Something we must do with increasing urgency.
Also, although emissions reductions are guaranteed in cap and trade with the declining cap, carbon tax relies on the market to cause emissions decline. Of the proposals for a carbon tax, all but one now have some form of emissions tracking with modifications to the price if emissions goals are not met.
Notably, the Republicans are becoming a bit more prominent in the discussion. Four bills are bi-partisan, thanks largely to Rep. Francis Rooney [R-FL-19] who is a cosponsor on three carbon tax bills and a sponsor of one. Rooney is from Florida, where they are dealing with the reality of sea level rise. In the last Congress, Rep. Carlos Curbelo – a Republican, also from Florida – tried to build bi-partisan support for carbon pricing with limited success. The other far-sighted Republican is Rep. Ryan Fitzpatrick [R-PA-1] who is sponsoring a carbon tax bill with the record length title “The Modernizing America with Rebuilding to Kickstart the Economy of the Twenty-first Century with a Historic Infrastructure-Centered Expansion Act of 2019” (HR 4520).
The number of proposals is growing, and laudably are becoming more bi-partisan. But we need to move much, much faster. Economists continue to stress the need to put in place market-based mechanisms to drive rapid change.
Regardless of the form carbon pricing takes, we need to get pricing in place as soon as possible and improve it as we go. We have models from all over the world that are successful. Let’s not “make the perfect the enemy of the good.”