The latest opposition to a carbon tax isn’t coming from coal magnates, oil companies, or free marketeers. It’s coming from climate hard-liners on the political left.
Emboldened by the blue wave at the polls in 2018 and galvanized by a series of dire reports on looming climate crises, progressive lawmakers and green groups are shooting down—in some cases preemptively—compromise proposals to pair carbon dividends with regulatory freezes.
“My concern is that we are going to be the frog in the pot of boiling water,” Rep. Alexandria Ocasio-Cortez, the freshman climate hawk and lead Green New Deal sponsor, told MSNBC's Chris Hayes at a town hall late last month. “And we’re going to debate and debate and debate and debate, and when we finally pass something, it is going to be a wimpy carbon tax and our kids are doomed.”
Ocasio-Cortez’s comments don’t come in a vacuum. Centrist Democrats and Republican advocacy groups are forging ahead with a slate of carbon-pricing bills, led by Rep. Ted Deutch’s Energy Innovation and Carbon Dividend Act.
Deutch is cochair of the House Climate Solutions Caucus. His bill would tax carbon-dioxide emissions at a rate of $15 per metric ton. That levy would jump an another $10 or $15 per metric ton with each passing year.
Advocates say the bill could slash total U.S. emissions by at least 40 percent in the next 12 years compared to 2016 levels. That's a much more ambitious goal than President Obama's Clean Power Plan, which never took effect after the Supreme Court blocked it in 2016. That rule aimed to cut emissions only in the electric-power sector by 32 percent below 2005 levels by 2030.
The Deutch bill also includes a decade-long freeze on Environmental Protection Agency authority to regulate some greenhouse-gas emissions. And that language is key to winning the support of some of the fossil-fuel giants that would be taxed.
But the most aggressive environmental groups are aiming to stamp out support on Capitol Hill before it grows.
“This is a terrible trade, and any Democrat who goes along with it should consider themselves warned. It is bad policy, and it is bad politics,” said Lukas Ross, a senior analyst at Friends of the Earth.
“Should carbon taxes be seen as some kind of silver bullet? Of course not,” Ross added. “A carbon tax is simply one tool among many. It should not be put on a pedestal, and it certainly shouldn't be traded for the protections of the Clean Air Act.”
David Doniger, a senior official at the Natural Resources Defense Council, echoed that opposition. “We think it’s important to keep all the climate-protection tools in the toolbox, and we need to add new ones to the toolbox,” he said.
Deutch’s legislation would bar the EPA from regulating emissions from power plants. But it would keep in place the EPA’s authority to regulate transportation emissions through fuel-economy standards, among some other Clean Air Act authorities.
“We wanted to keep this as narrow as possible,” said Ben Pendergrass, a senior lobbyist at the nonpartisan Citizens' Climate Lobby, which has been instrumental in promoting the legislation. “With a fee on carbon emissions, you get such great emissions reductions that you don’t really need those regulatory tools.”
Deutch’s legislation would return all Clean Air Act authority to the EPA if the tax structure fails to pare down emissions to targeted levels.
Democratic Reps. Robin Kelly and Al Lawson signed onto the Deutch bill late last week, bringing the total number of cosponsors to 32. So far, only one Republican, Rep. Francis Rooney, backs the bill. Republican Rep. Brian Fitzpatrick cosponsored a previous iteration of the legislation in the last Congress.
And that legislation, alongside a bill in the works at the Climate Leadership Council, is attracting fossil-fuel interest.
“[We’re] kind of agnostic as to whether it’s a carbon tax or a cap-and-trade as long as it’s well-designed,” said an energy lobbyist, who requested anonymity due to the ongoing discussions. “There’s going to be a lot of horse-trading on what gets preempted and what doesn’t."
The lobbyist, whose firm is in touch with Deutch’s office, said fossil-fuel groups will pore over details of the bill and other proposals to determine if they go far enough in eliminating regulatory duplication.
Some more moderate environmental groups are putting their weight behind that regulation-for-tax trade-off.
“This bill uses the Clean Air Act as a backstop," said Jason Albritton, director of U.S. climate and energy policy at The Nature Conservancy. "So if the carbon price doesn’t deliver what it’s expected to, you have other tools to deal with the problems. We are comfortable with that type of approach. Clearly, the details matter. But it’s an approach we’ve had worked on specifically in other legislation.”
Consensus is growing on Capitol Hill and in public polling that action is needed on climate change. And despite drastic carbon reductions in recent years, the U.S. is lagging behind the globe in putting carbon pricing in place.
More than 70 national or subnational jurisdictions globally are currently implementing, scheduling, or debating various forms of carbon pricing, including cap-and-trade programs, according to the World Bank. Economic powerhouse China, the globe’s biggest greenhouse-gas emitter by a wide margin, is rolling out a national cap-and-trade system after years of regional pilots.
Former Rep. Ryan Costello, a Republican from Pennsylvania who resigned last Congress, is now hammering out details on another carbon-tax proposal as managing director at the Climate Leadership Council, a group founded by GOP stalwarts James Baker and George Shultz. Lobbying powerhouse Squire Patton Boggs is pushing the proposal, and oil giant Exxon Mobil is footing a big portion of the bill.
The proposal, which Costello says will likely be floated in the fall, tacks tort limitations onto the regulatory freeze. Fossil-fuel groups are facing a range of litigation, and the tort language will likely scare off some moderate groups like The Nature Conservancy.
But Costello says the fringe elements of the political spectrum pose the biggest challenge.
“Will the Far Left demagogue it?” Costello said. “Sure." He added, "I think that the cultural base of the Republican Party is one side of the resistance, and then I think that the Far Left is certainly the other part of the resistance because no amount of regulation will ever be enough.”