A national carbon tax just may have some political life to it, if recent polling from the Yale Program on Climate Change Communication is any indication:
Support for a revenue-neutral carbon tax is about 68 percent nationwide, with opposition at around 29 percent, the latest iteration of the Yale Climate Opinion Maps shows. The interactive maps combine large-scale surveys with demographic and election data for a model its creators say can reliably estimate public opinion down to the local level.
These findings probably won’t help the recent plan from a Republican congressman to tax carbon as a climate strategy, which is essentially dead-on-arrival. But it could signal long-term life for this policy goal, as Congress changes.
Of course, public support for a federal cap-and-trade program was also pretty good back in the 2000s (recall Newt Gingrich teaming up with Nancy Pelosi to support similar efforts to address climate change), before the fossil fuel industry launched a major public relations campaign against it.
But there were some interesting additional nuggets from the Yale research:
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Seventy-seven percent of American adults think carbon dioxide should be regulated as a pollutant, and 70 percent think environmental protection is more important than economic growth.
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Sixty-two percent of American adults think global warming is affecting the weather. Wyoming and West Virginia are the only states where that view is not held by most people.
Turns out coal-producing areas like Wyoming and West Virginia are the least prone to accept climate science. No surprise there, but still interesting to see how people’s jobs influence their ability to process facts.
In fact, the Salt Lake Tribune noted that the Yale research showed heavy climate denial in one local coal-dominated county:
[E]astern Utah’s Emery County is one of just three counties in the nation where less than half of all adults believe that global warming is happening.
And that is out of 3,142 counties researched by the Yale Program on Climate Change Communication. Joining Emery with less than half of adults believing in climate change are Heard County, Ga., and Grant County, W. Va.
Yet another point in support of Upton Sinclair’s famous observation: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
Two big questions arise for me from yesterday’s news of a proposed Republican carbon tax to be introduced in the U.S. House of Representatives soon.
First, it’s clear the proposal largely takes aim at the coal industry. That’s why most of the carbon reductions from the tax will come from the power sector, and why Big Oil is supposedly okay with such a tax. From Big Oil’s perspective, swapping out the gas tax with a carbon tax probably won’t make much of a difference to gas prices and therefore to consumer demand, and they’re not nearly as hurt by such a carbon tax as they would be with direct regulation and state-level mandates, as they currently experience in California with policies like the Low Carbon Fuel Standard.
From my perspective, it’s helpful to have policies to phase out coal. But if the coal industry is already largely on its way out anyway due to competition from cheap natural gas and renewables (particularly solar PV combined with energy storage technologies, both of which are in the midst of massive price decreases), then why the need for a tax to hasten their demise? Particularly when the political cost of that tax would be to halt diverse federal climate regulation and possibly preempt some effective state-level policies, like California’s AB/SB 32 greenhouse gas emission reduction laws?
Second, the vast majority of the revenue from this proposed carbon tax would go to the federal highway trust fund. But does it make sense to use carbon tax revenue essentially to subsidize more driving and associated pollution? A more logical way to fund the roads would be through a tax or fee on miles driven. That is not only a more fair approach (those who drive the roads more would then have to pay more to maintain them), it serves an environmental benefit of discouraging excess driving.
Right now there are no plans to replace the federal gas tax with a mileage fee. But states like Oregon and California are experimenting with them. If they can find suitable technologies to track miles, address the privacy concerns some have with government tracking these miles, and ensure a stable source of revenue for road maintenance, why not let these experiments play out and possibly transfer to the national stage as a more sensible gas tax replacement?
While a carbon tax might sound nice in theory, these types of details and political trade-offs matter. And in this case, climate advocates should have a lot of questions before they sign on to support such a policy.
The U.S. has long lacked a national strategy for reducing carbon emissions. To fill the void, various agencies have proposed a variety of regulations under existing laws, such as efforts to reduce methane emissions in oil-and-gas operations, limit carbon carbon emissions from the power sector (the Clean Power Plan), and promote environmental review of the greenhouse gas impacts of various federally approved projects.
With the death of a proposed federal cap-and-trade program in 2010 under a Democratic congress, some climate advocates now see hope in developing a national carbon tax. This approach makes a lot of sense: it could tax upstream emissions for carbon-based fuels like coal, oil and gas, thereby discouraging their use both by industry and by consumers, who may then seek to reduce consumption of things like coal-based electricity and gasoline for transportation. The revenue in turn could be used to fund various climate-friendly projects or be returned to taxpayers as a dividend.
Supporters actually include some Republicans, who prefer this more minimalist government approach to combating climate change instead of heavy-handed regulations or mandates, such as we see in states like California. To that end, a Florida Republican, Rep. Carlos Curbelo, is about to introduce a carbon tax proposal that is unlikely to go anywhere in this Congress but could serve as an opening salvo and building block for future policy.
E&E News received a copy of the legislation and had this to say about it:
A copy of the draft bill obtained by E&E News calls for eliminating the federal gas tax and replacing it with a $23-per-ton tax on carbon emissions from oil refineries, gas processing plants and coal mine mouths beginning in 2020. Industrial sectors such as cement, aluminum, steel and glass would also pay the fee for emissions stemming from physical or chemical reactions outside of energy production. Sources said Curbelo’s office was shopping that version of the bill last week.
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It would halt — but not kill — EPA regulations on greenhouse gas emissions so long as the tax meets its goals to cut carbon emissions. The draft legislation contains check-in points in 2025 and 2029 to consider reinstating regulations if the tax hasn’t curbed enough greenhouse gases. The moratorium would sunset after 2033 if emissions goals are met. That provision is meant to address concerns from Democrats and environmental groups, which generally oppose forfeiting EPA’s authority to regulate carbon in exchange for a carbon tax.
Significantly, seventy percent of the revenues would go to the federal Highway Trust Fund to help shore up the dwindling gas tax revenue. The remaining revenue would go to state grants for low-income families to offset higher energy costs, research and development programs, and financing coastal restoration projects.
Meanwhile, companion research from libertarian-oriented think tanks modeled the greenhouse gas benefits. They suggest that emissions would drop 1.2 percent at a tax of $14 per ton, 3.2 percent at $50 per ton and 3.5 percent at $73 per ton. Cubelo’s research shows the policy would reduce greenhouse gas emissions 24 percent below 2005 levels by 2020 and 30 percent below 2005 levels in 2032, exceeding the targets for the U.S. under the Paris accord.
The modelers also claim the carbon tax would have negligible macroeconomic effects, with little change to U.S. GDP. The oil and gas sector would not be affected much, although transportation-sector emissions would generally drop 2 percent. The power sector would see much larger reductions, due to decreased reliance on coal-fired power plants.
The question for Democrats and other climate advocates is whether they would accept a national carbon tax that would displace the various climate regulations — and possibly preempt state action on climate. As my colleague Dan Farber noted on Legal Planet, jurisdictional and regulatory fragmentation on climate policy is advantageous to building political resilience. We’ve seen this play out in practice: the election of someone like Trump poses less of a threat when climate policies are embedded in multiple agencies, statutes, and state and local jurisdictions. A national carbon tax, while perhaps more effective in reducing emissions, flies in the face of that logic because it could swiftly be reversed by a future congress and president.
While decisions won’t have to be made soon on this bill, given the current political climate, climate advocates may soon have to grapple with the carbon tax option — and it’s potential political downside.
As Republicans in Congress debut their proposed tax reforms today, climate and renewable energy advocates will be looking to see how the proposals will affect progress on these intertwined issues.
The most far-reaching — but unlikely impact — would be if congressional negotiators included a carbon tax. Many on the left, as well as some libertarians, have been urging a carbon tax for a long time (although some on the left would prefer command-and-control or sticking with the cap-and-trade schemes in the northeast and California). Republicans generally dislike taxes.
Despite the seemingly un-Republican nature of a carbon tax, leading Republicans like former secretaries of State James Baker and George Shultz and other former top government officials and business leaders have proposed a revenue-neutral carbon tax to be included in the debate over tax reform.
Although Congressional leaders have thrown cold water on the idea so far, the idea may actually have legs. Here’s why: Republicans need new revenues to offset their giant tax cuts for businesses. The carbon tax would provide those revenues. But to make the tax palatable to Republicans, it would need to be accompanied with significant regulatory rollbacks, such as on National Environmental Policy Act (NEPA) environmental review or the federal renewable fuel standard.
While it’s still doubtful a carbon tax will be included in the reforms, it would be a monumental policy shift. Those on the left would be wise to monitor its potential impact on environmental policy, particularly how it could preempt renewable and climate policies at the state level.
Meanwhile, tax reform could also impact electric vehicle and renewable energy deployment. Republicans want to completely eliminate the $7500 federal tax credit for battery electric vehicles, which would greatly hurt demand for the vehicles if it goes through.
On renewable energy, the obvious targets are the federal investment and production tax credits for solar and wind. While those are scheduled to phase out soon, the wind energy production tax credits would be more immediately undercut by the current proposed reform. And less obviously, a cut to the corporate tax rate would mean large profitable businesses would have less need to invest in renewable energy as a way to obtain tax credits (they would lose their “tax appetite,” in the parlance of energy deal-makers).
Either way, all this uncertainty around climate and energy policies involved in tax reform is likely dampening current investment plans in renewables and other clean technologies. So whatever the outcome of this process, it would probably benefit energy advocates if it wrapped up quickly.
