Sens. Whitehouse, Schatz Want to Curb Climate Change with Carbon Fee
Sens. Sheldon Whitehouse (D-R.Is.) and Brian Schatz (D-Hawaii) have introduced a revenue-neutral bill employing a market-based approach – a price on carbon pollution – to curb climate change and boost the economy.
The Joint Committee on Taxation has estimated that the American Opportunity Carbon Fee Act (S. 1548) would generate more than $2 trillion over 10 years. That money would be returned to American families and businesses in the form of:
- Lower corporate tax rates;
- An annual inflation-adjusted $500 refundable tax credit for individuals, and $1,000 for married couples filing jointly, to offset payroll taxes paid; and
- An inflation-adjusted annual benefit starting at $500 for Social Security and veterans’ program beneficiaries and other retired and disabled Americans.
The bill would also allow states to provide funds to low-income and rural households and workers transitioning to new industries.
Senators Seek Bipartisan Support
Whitehouse called for bipartisan support for the bill, saying it “follows conservative free-market principles in driving emission reductions and generates big economic benefits for American families and businesses.
Speaking on the Senate floor in favor of bipartisan solutions to climate change, Schatz said, “We want a Republican dance partner. We want conservative leadership on this great challenge of our time. Climate change increases the severity and frequency of storms and natural disasters. This is not only a humanitarian problem but also an economic issue. A heat wave in Texas in 2011, for example, caused $5 billion in livestock and crop losses. Climate change makes events like this 20 times more likely to occur today than in the 1960s.”
He continued, “There is a role for government here…Congress needs to step in and legislate to get the reductions we need to make sure we’re protecting low-income and working families and still growing our economy.”
Schatz also pointed out that the Environmental Protection Agency’s Clean Power Plan and market mechanisms like a price on carbon “are mutually reinforcing. If power plants reduce emissions under the Clean Power Plan,” he said, “they’ll pay less in carbon fees.”
Fees Start at $45 per ton
The fee on major sources of greenhouse gases would start at $45 a metric ton in 2016, increasing annually by 2 percent plus inflation. The co-sponsors say this would ensure that “emitters would be held responsible for the harm they are offloading onto the American people.”
The fee would be assessed on:
- Fossil fuels when mined, processed, refined or imported;
- Large emitters of non-fossil-fuel-based greenhouse gases; and
- Producers and importers of certain industrial gases with high global-warming potential.
In addition, border adjustments would level the playing field for manufacturers of energy-intensive goods.