Carbon Pricing Proposals in the 116th Congress

by Jason Ye (Center for Climate and Energy Solutions) There are various market-based approaches to pricing carbon (e.g. carbon tax, cap and trade, and a clean energy standard). All of these can reduce emissions cost-effectively while driving clean energy innovation. This factsheet compares six carbon tax and cap-and-dividend proposals introduced in the 116th Congress (2019–2020).

Carbon pricing offers a cost-effective way to reduce greenhouse gas emissions. Ten states are already pricing carbon, and a number of states are considering similar action. This fact sheet summarizes and compares six carbon pricing proposals that have been introduced so far in the 116th Congress (2019–2020), highlighting similarities and differences. Five of these proposals would establish a carbon tax (or “carbon fee”) and one would establish a cap-and-dividend program (a cap-and-trade program that rebates program revenues to consumers).

The six proposals are:
• The Energy Innovation and Carbon Dividend Act of 2019 (H.R.763) introduced by Reps. Ted Deutch (D-Fla.) and Francis Rooney (R-Fla.) on Jan. 24, 2019;
• The Healthy Climate and Family Security Act of 2019 (S.940 and H.R.1960) introduced by Sen. Chris Van Hollen (D-Md.) and Rep. Don Beyer (D-Va.) on March 28, 2019;
• The American Opportunity Carbon Fee Act of 2019 (S.1128) reintroduced by Sens. Sheldon Whitehouse (D-R.I.), Brian Schatz (D-Hawaii), Martin Heinrich (D-N.M.), and Kirsten Gillibrand (D-N.Y.) on April 10, 2019;
• The Climate Action Rebate Act of 2019 (S.2284 and H.R.4051) introduced by Sens. Chris Coons (D-Del.) and Dianne Feinstein (D-Calif.), and Rep. Jimmy Panetta (D-Calif.) on July 25, 2019;
• The Stemming Warming and Augmenting Pay Act of 2019 (H.R.4058) introduced by Reps. Francis Rooney (R-Fla.) and Dan Lipinski (D-Ill.) on July 25, 2019;
• The Raise Wages, Cut Carbon Act of 2019 Act of 2019 (H.R.3966) introduced by Reps. Dan Lipinski (D-Ill.) and Francis Rooney (R-Fla.) on July 25, 2019.

While each proposal would establish a price on carbon, they differ in terms of the emissions covered.

For example, the Whitehouse-Schatz proposal would apply a tax to all greenhouse gases covered by the U.S. Environmental Protection Agency (EPA) Greenhouse Gas Reporting Rule (not just carbon dioxide). The Rooney and Lipinski proposals would apply a tax to greenhouse gas emissions from fossil fuels and certain industrial products and processes while the DeutchRooney and Coons-Feinstein proposals would apply a tax on carbon dioxide equivalent emissions from fossil fuels and a reduced carbon tax on fluorinated gases.

Other differences include the starting level of the tax, how quickly it increases over time (see Figure 1), and how the revenue is used. The Whitehouse-Schatz proposal, for example, would set a $52 per metric ton fee that rises at 6 percent over inflation annually until emissions are 80 percent below 2005 levels. Revenues would be used to provide an annual refundable tax credit to consumers and grants to states to compensate low-income households for impacts on energy costs. The Deutch-Rooney proposal would establish a $15 per metric ton carbon tax that rises $10 annually and could rise $15 annually if annual emission targets are not met. Revenues would be rebated to the American people as a dividend. The Rooney proposal would establish a $30 per metric ton carbon tax that rises at 5 percent over inflation annually and could rise $3 biennially if if emission targets are not met. And the Lipinski proposal would establish a $40 per metric carbon tax that rises at 2.5 percent over inflation. Most of the revenues from the Rooney and Lipinski proposals would be used to offset payroll taxes. READ MORE

Excerpt from Politico's Morning Energy: ANOTHER CARBON TAX BILL: Adding to the several bills introduced this Congress that would put a price on greenhouse gas emissions, Rep. John Larson (D-Conn.) introduced a bill, H.R. 4142 (116), Friday to tax carbon pollution and reduce emissions by 52 percent in 10 years. The bill would create a carbon tax starting at $52 per ton and would rise 6 percent annually above inflation, raising $2.3 trillion in revenue over 10 years. READ MORE