Is a Carbon Tax Deal on the Horizon?

Is a Carbon Tax Deal on the Horizon?

If the U.S. Congress seriously considers a carbon tax as part of comprehensive tax reform, lawmakers will face the same issue that has bogged down most energy and climate bills in the past two years: what role should the Environmental Protection Agency (EPA) play in regulating carbon emissions?

Republicans are likely to insist that if Congress imposes a tax as an incentive to reduce carbon emissions, lawmakers should strip EPA of its authority to regulate greenhouse gases.

“That would be a very big sticking point,” House Energy and Commerce Committee ranking member Henry Waxman (D-Calif.) said in an interview with National Journal Daily. “A carbon tax or a price on carbon would be a strong incentive for the development of new technologies. But because it’s so complicated, I would not support preempting EPA. EPA can assure us that we can actually get the reductions we need.”

EPA’s greenhouse-gas rules caused one of the biggest impasses in the negotiations between Senate Energy and Natural Resources Committee ranking member Lisa Murkowski (R-Alaska.) and outgoing Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) over the clean-energy standard that Bingaman proposed earlier this year at President Obama’s behest. That legislation, which did not preempt EPA, failed to gain traction.

Most lawmakers from both parties are shying away from talk about a carbon tax, and White House spokesman Jay Carney said last week that Obama has ruled the idea out.

Carbon-tax backers, congressional Democrats, and environmentalists seem to be split on what to do about EPA. Rep. Jim McDermott (D-Wash.), who introduced a carbon-tax bill in this Congress, would prefer to not preempt EPA but noted that there should be room for compromise.

“We need to deal with pressing climate issues in a way that will reduce the deficit and sustain our economy. My bill does just that, and it sets specific reduction targets that reduce emissions by 80 percent over a 40-year period,” McDermott said in a statement to National Journal Daily. “However, my bill is a starting point for a necessary discussion, and I am open to incorporating ideas to create the bipartisan support it needs to become law.”

Posted on Monday, November 19, 2012 (Archive on Monday, January 01, 0001)
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