Since the 116th Congress began in January, seven carbon pricing bills have been introduced at the federal level, four of them in the last month. Some of these bills will do a better job at effectively and equitably reducing emissions than others, but all are important in promoting a much-needed dialogue around carbon pricing on Capitol Hill. 

Six of the introduced bills put a direct fee on carbon pollution, while the seventh establishes a federal cap-and-trade program. The direct-fee bills vary in their rate, the way they allocate revenue, and whether or not they put a moratorium on the EPA’s existing ability to regulate emissions. There are, however, similarities among them; all impose some sort of border adjustment fee to protect American businesses, rely on markets to reduce emissions, and return at least some of the revenue back to individuals.  

Here is a synopsis of each of the carbon pricing bills introduced in the 116th Congress:  

Energy Innovation and Carbon Dividend Act

(HR. 763)  // Fact Sheet

My Take: Right now, it’s fair to say that when people talk about “the federal carbon pricing bill”, they are talking about this one. The Energy Innovation and Carbon Dividend Act is the proposal backed by Citizens Climate Lobby (CCL), a grassroots environmental organization that has trained over 100,000 volunteers in the last decade to help build support for a revenue neutral carbon fee and dividend bill. CCL’s support is notable because a bill supported and pushed for by thousands of individuals undoubtedly carries a lot more weight than one introduced by a single legislative office on the Hill. Furthermore, this bill has 58 co-sponsors, far more than any other carbon pricing bill in Congress today. You can find more information about this bill online, or check out our recent webinar on the proposal.

American Opportunity Carbon Fee Act

(S. 1128) // Fact Sheet

My Take: In a way, tax swaps are politically appealing – the mantra of “why tax employment when you can tax pollution?” resonates with those who dislike seeing thousands of dollars removed from their hard-earned paychecks (aka most people). The advantages of reducing payroll taxes are two-fold. It (1) reduces the operating cost of labor for employers and thereby makes labor more attractive, and (2) increases the after-tax earnings for employees, thus making working more economically advantageous. However, offsetting payroll taxes is a more regressive way to redistribute revenue than directly giving it back to households. Equity is therefore a potential concern for this bill and the two others that use revenue to reduce payroll taxes. Overall, while the American Carbon Fee Opportunity Act starts off with the highest initial carbon price, it does not increase as rapidly as Rep. Coon’s and Deutch’s bills.

Climate Action Rebate Act

(S. 2284) // Fact Sheet

My Take: This bill probably takes the cake as my preferred legislation. That’s largely because of the fact that by 2030, it will impose a much higher per ton fee on carbon pollution than any other proposal introduced this session. Since we know that a high price on carbon is needed to ensure the emission reductions required to avoid the worst impacts of climate change, the fact that the Climate Action Rebate Act will price carbon at $165 per ton by 2030 is welcome news. Furthermore, its revenue-return model will help protect consumers with incomes below $150,000 and its investments will be made in initiatives that will only further reduce emissions, like clean infrastructure and energy innovation.

Stemming Warming and Augmenting Pay (SWAP) Act

(HR. 4058) // Fact Sheet

My Take: Reps. Rooney and Lipinski introduced two carbon pricing bills alongside the CCL proposal they’ve also co-sponsored: this bill and the Raise Wages, Cut Carbon Act. Neither bill’s full language has been released, so they’re both hard to assess. Nevertheless, thanks to Rooney’s support, the two bills can be branded as bipartisan; conservative-leaning think tanks, like Niskanen Center and R-Street Institute, applauded the introduction of these proposals. It’s interesting to note that like the CCL bill, these two bills both temporarily suspend the EPA’s ability to regulate emissions. That’s a common, and potentially problematic, denominator between the three bills that Rooney has supported. Finally, since the SWAP Act essentially supersedes existing state and regional level programs by its fifth year of implementation, it will be crucial to see how that provision affects robust, existing programs, like California’s cap-and-trade.

Raise Wages, Cut Carbon Act

(HR 3966) // Fact Sheet

My Take: This is the second of the two bills Reps. Rooney and Lipinski have partnered on. Like the SWAP Act, the Raise Wages, Cut Carbon Act puts most of the revenue toward reducing payroll taxes, and suspends the EPA’s regulations on stationary source emissions. The initial tax rate is higher than SWAP ($40 rather than $30 per ton), but its annual increase is lower (2.5% vs SWAP’s 5%). It’s not quite clear why the pair of legislators chose to introduce two very similar bills on the same day, but hey – I guess we’re getting more to choose from?

America Wins Act

(AWA) // Fact Sheet

My Take: The language of this bill, and the promotional materials that came with its release, are framed more around the pressing need for America to invest in its infrastructure and roads rather than the need to reduce emissions. It’s possible that Rep. Larson is strategically promoting this as an infrastructure bill because he knows that, unfortunately, infrastructure is a more bipartisan topic than climate action. That messaging could separate the American Wins Act from the flurry of other carbon pricing proposals introduced this summer. While in a sense, this distinction might be politically advantageous, it’s a bit strange for a bill intended to reduce emissions to be putting hundreds of billions of dollars into highways, roads, bridges, and airports, all things that will undoubtedly spur increased emissions. Ideally, the bill would primarily invest in public transit, electric vehicles, and other less emission-intensive forms of transportation.

Healthy Climate and Family Security Act

(S. 940) // Fact Sheet

My Take: This is the only cap-and-trade proposal on the table, which is surprising considering the fact that the only existing carbon pricing programs in the US today are cap-and-trade (see: RGGI, WCI). Cap-and-trade also has historical precedence in the US; in the 1990s, the Acid Rain Program was established to reduce levels of sulfur dioxide and nitrogen oxides, which were causing acid rain and, in turn, killing aquatic life and forests. That program was very successful in significantly reducing sulfur emissions, and by 2010, the health benefits of the program were estimated at $50 billion annually. A similarly-structured program regulating carbon emissions has been on the table in Congress before, but in recent years, there hasn’t really been a concerted effort to push forward cap-and-trade at the federal level. It’ll be interesting to see if this proposal gains any momentum, and if other cap-and-trade bills are introduced after the legislative recess. 

Another proposal, authored by James Baker and George Shultz and backed by the Climate Leadership Council (CLC), is in the works. While some of its specifics have not yet been fleshed out, the proposal has already garnered support among industry groups. The Baker-Schultz proposal levies a $40 per ton carbon fee that rises by 2 to 5 percent annually, reaching as high as $65 per ton by 2030. Industry and oil companies may be particularly fond of the fact it prohibits future lawsuits against energy companies involving climate change.

What does it all mean?

Ultimately, all of these bills will have trouble moving through the Senate under Mitch McConnel’s leadership. Nevertheless, their introduction is an important part of inspiring a healthy and critical conversation on carbon pricing at the federal level.  

Another noteworthy point is that while three of the seven bills tout bipartisan support, Rep. Rooney is the only Republican member of Congress who has championed any legislation. Rooney represents Florida’s 19th district, located in southwestern Florida between Fort Myers and Marco Island. His district is subject to rising sea levels and is increasingly feeling the impacts of the climate crisis. By sponsoring and championing carbon pricing legislation, Rooney is representing his district in the way that all Florida lawmakers should. But he’s going to have to find conservative allies to champion his proposals, particularly in his home state, if these bills are going to truly be perceived as bipartisan approaches. 

It’s also worth pointing out that Rooney only supports bills that temporarily suspend the EPA’s ability to regulate emissions. Some are concerned about this provision; while under most bills, suspension of regulation is lifted if emission reduction targets are not met after a certain period of time (i.e ten years), recent IPCC reports beg the question of whether stripping the EPA of its regulatory authority really is the best pathway forward. 

Regardless of what your bill of choice is, this flurry of proposals is welcome news. Policymakers are beginning to finally understand that the existing policies we have been relying on to regulate greenhouse gas emissions are wildly insufficient, and that a price on carbon and other heat-trapping gases is desperately needed.  

This article will be updated to reflect newly introduced carbon pricing legislation.