EPA Quietly Signs Off on State Carbon Taxes

The agency didn’t mention it in the new climate rules, but the plan would allow states to place a levy on greenhouse gases.

WASHINGTON, DC - SEPTEMBER 20: Environmental Protection Agency Administrator Gina McCarthy addresses a breakfast event at the National Press Club September 20, 2013 in Washington, DC. McCarthy announced that the EPA is proposing regulations to limit greenhouse gas emissions, which requires future coal burning power plants to decrease 40 percent of their emission. (Photo by Alex Wong/Getty Images)
National Journal
Ben Geman
June 2, 2014, 11:03 a.m.

EPA’s big new draft reg­u­la­tions to cut power-plant car­bon di­ox­ide emis­sions name-check all kinds of tools that states can use to com­ply with the stand­ards.

They in­clude re­new­able-power growth, ef­fi­ciency pro­grams, switch­ing coal plants to nat­ur­al gas, and cap-and-trade ini­ti­at­ives, which are already un­der­way in Cali­for­nia and among North­east­ern states. Not men­tioned: Im­pos­ing state-level car­bon taxes on power-plant emis­sions.

It’s not something the agency is likely to tout at a time when top Re­pub­lic­ans are already try­ing to frame the whole rule as a “na­tion­al en­ergy tax.” But EPA of­fi­cials, when asked, made it clear Monday that a state could in­deed choose to go the car­bon tax route.

“EPA is not really put­ting lim­its on meas­ures states can choose,” as long as they lead to com­pli­ance with the re­quired emis­sions rates, an EPA of­fi­cial said on a call with re­port­ers about the rule that’s a pil­lar of the White House cli­mate agenda.

State-level car­bon taxes have not taken off. But some ad­voc­ates are hope­ful that the EPA rules, which task states with cre­at­ing plans to curb their power sec­tor emis­sions, present a new op­por­tun­ity.

A left-right co­ali­tion of act­iv­ists has for years been wa­ging a very steep up­hill fight for a car­bon tax at the na­tion­al level, ar­guing that it’s the most straight­for­ward way to ad­dress emis­sions. Some ad­voc­ates say it should be paired with re­duc­tions in per­son­al taxes.

Tyson Slo­cum of the lib­er­al watch­dog group Pub­lic Cit­izen said the ad hoc co­ali­tion will now push the idea with states, too. “You are ab­so­lutely go­ing see that com­mu­nic­ated to states as they work thor­ough this pro­cess” of craft­ing plans to com­ply with the EPA rules, said Slo­cum, dir­ect­or of Pub­lic Cit­izen’s en­ergy pro­gram.

Ex­perts with Stan­ford Uni­versity and the Brook­ings In­sti­tu­tion re­cently wrote a pa­per call­ing on EPA to of­fer states the op­tion of ex­plor­ing car­bon taxes as a way to meet the agency’s re­quire­ments.

Na­tion­wide, the rules seek to curb car­bon emis­sions from elec­tri­city gen­er­a­tion, which ac­counts for roughly 40 per­cent of U.S. car­bon pol­lu­tion, by 30 per­cent com­pared with 2005 levels, by 2030.

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