A carbon tax bill that gives revenue back to households? Now we're getting somewhere.
That's what Sen. Barbara Boxer, D-Calif., placed on the table when she and Sen. Bernie Sanders, I-Vt., announced plans to introduce "carbon-fee-and-dividend" legislation. Their proposal places a fee on coal, oil and natural gas at the first point of sale and then rebates a substantial part of the revenue to the public as monthly "dividends," either by check or electronically.
At a press conference to introduce the Climate Protection Act, Sen. Boxer said her aim was to get legislation to the floor of the Senate by summer.
What could possibly be better?
How about Republican support?
Without backing from some GOP lawmakers, the legislation stands little chance of passage in the Senate, much less the Republican-controlled House. Unless it is bipartisan, any climate legislation — no matter its intention — amounts to little more than a gesture.
Given President Obama's ultimatum to Congress to cut carbon or "I will," the GOP has great incentive to support a market-based solution to the climate crisis. The alternative is expansion of Environmental Protection Agency regulations on greenhouse gas emissions from power plants. Efforts to block those regulations will prove to be a waste of time and energy, as the U.S. Supreme Court has already ruled that the EPA has the authority to regulate carbon dioxide and other pollutants that warm the Earth.
Time and time again, conservatives extol the power of the free market rather than government to make good things happen in our society. It's time, then, for Republicans to walk the talk and embrace a tax on carbon that returns revenue to the public.
Greg Mankiw, economic advisor to President George W. Bush and presidential candidate Mitt Romney, explains the conservative rationale for a carbon tax: "Economists have long understood that the key to smart environmental policy is aligning private incentives with true social costs and benefits. That means putting a price on carbon emissions, so households and firms will have good reason to reduce their use of fossil fuels and to develop alternative energy sources."
While Obama wields the hammer that may move Republicans toward legislative action, the Boxer-Sanders bills, in their current form, stand little chance of attracting support from across the aisle. The phrase that pays among conservatives is "revenue-neutral," meaning it needs to be an approach that doesn't increase the size of government, which is an anathema to all Republicans.
Here are the main provisions of the Boxer-Sanders bills:
Impose a $20 per ton CO2 fee and equivalent fee on methane emissions, rising 5.6 percent annually;
Sixty percent of the revenue would be returned monthly as direct "dividends," electronically or by check;
The tax is applied upstream (at the first point of sale of the fossil fuel) and the bill includes border tax adjustments to protect domestic industry and induce other nations to enact carbon taxes;
Twenty-five percent of revenue would go to the general Treasury for deficit reduction; and
Ten percent to 15 percent of revenue will fund clean energy proposals and low-income weatherization.
It all sounds good until the final item, and this is where the Boxer-Sanders bills become a non-starter for Republicans.Conservatives are pretty clear they have no intention of increasing federal revenue and expanding the role of government. Unless it is revenue-neutral — and there's even some debate as to whether using funds to reduce the deficit makes it revenue-neutral — Republicans will remain on the sidelines.
What this means is that the two warring factions in Congress will need to meet each other halfway: Republicans agreeing to a price on carbon and Democrats agreeing to make it revenue-neutral.
With study after study telling us the window is rapidly closing on our ability to contain climate change, our nation and our world can no longer wait for Congress to enact legislation that reduces greenhouse gas emissions.
A direct price on carbon-based fuels, with revenue returned to households, is the most promising mechanism to cut those emissions. The Boxer-Sanders bill delivers on this approach. Make the Climate Protection Act revenue-neutral and we just might find enough Republican support to get it passed.
Mark Reynolds is the executive director of Citizens Climate Lobby.
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