While moderating the first Democratic debate last month, NBC’s Chuck Todd asked presidential candidates a misguided question: “If carbon pricing is politically impossible, how do we pay for climate mitigation?”
There’s a lot wrong with that question, and if you spend your days advocating and researching carbon pricing solutions like I do, you probably shuddered as carbon pricing was hastily labelled as ‘impossible’ on one of the nation’s brightest political stages. Todd’s most basic premise is erroneous — carbon pricing provides a disincentive to pollute just as much, if not more, than it serves as a means of generating revenue. Furthermore, his proposition that it is not possible, is blatantly false. In fact, more than 46 national and 28 subnational jurisdictions are imposing fees on carbon pollution today, including most of Europe, China, Canada, and South Africa.
Just this week, we saw a great win for the carbon pricing movement here in the U.S., as Members of Congress in both chambers and political parties, introduced bills that put a price on pollution. This should send a powerful message to Todd and other commentators who have wrongfully dismissed carbon pricing as a viable option. At the same time, a growing number of 2020 Presidential candidates have endorsed carbon pricing, including Joe Biden, Pete Buttigieg, Kirsten Gillibrand, Jay Inslee, and many others.
The most ambitious of the proposals is the Climate Action Rebate Act, a Democrat-supported plan in the Senate that will rebate revenue back to low- and middle-income Americans, and invest in clean energy and a just economic transition.
The second major proposal that dropped yesterday, the Stemming Warming and Augmenting Pay (SWAP) Act, has support from long-time conservative carbon pricing champion, Rep. Francis Rooney (R-FL). The bill uses generated revenue to reduce payroll taxes, and puts a pause on the federal government’s authority to otherwise regulate emissions.
Both of these bills will help generate critical conversation around what a carbon pricing scheme might look like at the federal level. They join the Energy Innovation and Carbon Dividend Act (HR 763), the bipartisan Citizens Climate Lobby-backed carbon pricing legislation that was introduced back in January. Climate XChange held a webinar on the CCL proposal last month – check it out for a deep dive into that legislation, which now boasts 58 co-sponsors.
For now, let’s take a glance at the two major pieces of legislation introduced on July 25th.
Here’s the first proposed plan: the Climate Action Rebate Act
Sen. Chris Coons (D-DE), Sen. Dianne Feinstein (D-CA), and Rep. Jimmy Panneta (D-CA) introduced the Climate Action Rebate Act, an ambitious plan that is estimated to generate $2.5 trillion in revenue over ten years.
Here are the key components of the legislation:
- Carbon Fee: Starting in 2020, the bill imposes a $15 per ton carbon fee, which rises by $15 annually. Once emissions reach 10% of 2017 levels, the fee no longer rises. However, if emission reduction goals are not being met, the fee will rise by $30 per year.
- Border Adjustment: Like most proposed federal carbon pricing bills, this proposal will levy a border adjustment fee on fossil fuels and carbon-intensive imported goods. This will prevent US producers in energy-intensive, trade exposed industries (EITEIs) from being disadvantaged compared to international competitors.
- Revenue Use: It rebates 70 percent of the revenue to low- and middle-income Americans as a monthly dividend, and uses the rest for energy infrastructure, job retraining for fossil fuel workers, and research and development. This revenue allocation structure is similar to state Rep. Jen Benson’s bill (H2810) in the Massachusetts legislature, which has 108 co-sponsors in the House.
The bill ultimately aims to slash US carbon emissions by 55% by 2030 and 100% by 2050, compared to 2017 levels. While those goals are lower than those set by the Green New Deal, they are more ambitious than those set by the other existing federal carbon pricing proposals.
The Climate Action Rebate Act is also notable in that it does not put a pause on the federal regulatory authority. The other prominent federal carbon pricing proposal currently on the table (HR 763) puts a moratorium on the EPA ability to regulate carbon emissions. While this regulatory pause is lifted after ten years if emission reduction targets are not being met, some are concerned about the provision.
My take? This proposal is the most ambitious of the options on the table, though Republicans would likely deem it the least appealing. It will be interesting to see if more progressive members of Congress who have been pushing for the Green New Deal and other bold climate policies will get behind this legislation.
Here’s the second bill: A bipartisan carbon pricing option
Rep. Francis Rooney (R-FL), a long-time proponent of carbon pricing who also co-sponsored HR 763, introduced another carbon pricing bill on July 25th. Rooney’s bill, the Stemming Warming and Augmenting Pay (SWAP) Act, establishes a $30 per ton fee on carbon emissions, and uses generated revenue to reduce payroll taxes. Unlike the Climate Action Rebate Act, Rooney’s bill suspends the EPA’s authority to regulate greenhouse gas emissions. The bill is co-sponsored by Rep. Daniel Lipinski (D-IL). The pair of Representatives also introduced the Raise Wages, Cut Carbon Act yesterday.
Rooney, who represents a Southwest Florida district exposed to sea level rise, is one of only a few congressional Republicans who publicly support a direct fee on carbon pollution.
“The idea is to have several of these carbon tax bills on the table for debate,” Rooney told the Washington Examiner. “All are legitimate and each has its own constituency. I would think this one [the SWAP Act] would be easier to sell for Republicans because it’s supportive of business and jobs rather than just giving it back to families.”
My take? It’s going to be hard for progressives and some climate advocates to get behind a bill that puts a moratorium on regulation and doesn’t explicitly return revenue to ratepayers. At the same time, with a Republican-majority Senate, bipartisan support will be critical. Rep. Rooney and Lipinski’s bills are more likely to generate support in both parties.
While a few conservative members of Congress have championed some climate action, many more have denied the validity of climate science and fervently opposed substantial climate policies.
In fact, in 2018, a resolution denouncing the idea of a carbon tax as detrimental to the US economy passed the House by a 229-180 vote. Only seven Republican legislators, several of whom have since retired, opposed the resolution. That resolution has been introduced by Republican Representatives Steve Scalise and David McKinley every year since 2013, and was introduced once again last week. With climate change on the forefront of political conversation, it will be interesting to see if the bill resolution gains more opposition than in years past.
For now, it remains to be seen how much traction the newly-dropped carbon pricing bills will gain in Congress as the session nears a recess. Nevertheless, the addition of new legislation and ideas are great step forward for the national carbon pricing conversation. Elected officials are finally beginning to understand and acknowledge that pricing carbon is a common sense solution.