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.
