Opinion: Biden Should Embrace a Carbon Tax

Marketing/Markets and Sales, Opinions, Policy, White House

May 12, 2021

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by Henry M. Paulson, Jr. and Erskine B. Bowles (Washington Post) … A carbon tax, which taxes carbon dioxide and other greenhouse-gas emissions, is a proven means to raise large sums of much-needed revenue while lowering carbon emissions. It is supported by 67 percent of Americans, embraced by a bipartisan consensus of economists and increasingly supported by the business community. Some critics argue a carbon tax is a political distraction, one that fails to meet the climate challenge and disproportionately hurts the poor. Others say a carbon tax would damage U.S. competitiveness and break Biden’s promise to not raise taxes on households earning less than $400,000 a year. We believe each of these concerns can be addressed.

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This year, U.S. debt is expected to exceed the value of the entire U.S. economy for the first time since World War II, posing a serious threat to our long-term future. A 2017 study by the Treasury Department estimates a carbon tax that starts at $49 per ton of emissions, rising at 2 percent annually, could raise $2.2 trillion over a 10-year period.

Would a carbon tax be regressive? Not necessarily. For one thing, the wealthy use a lot more carbon-based energy than those with lower incomes. More importantly, carbon tax revenue could be invested in poorer communities that face disproportionate risks from climate change; targeted to support and retrain workers who are adversely affected by the transition to a clean-energy economy; used to increase the earned income tax credit or other wage subsidies; or redistributed through dividend checks or tax rebates on a monthly basis. Or they could be distributed directly into individual retirement accounts. Such strategies would be highly progressive.

Of course, a primary reason for a carbon tax is to discourage firms from spewing carbon into the atmosphere and encourage them to develop, invest in and scale clean, low-carbon technologies.

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… (A) necessary feature of any sensible carbon tax plan is what’s known as a border adjustment, which would impose economic penalties on certain goods from countries that do not reduce their emissions.

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It is essential that we standardize the trade in carbon at home and reach agreements internationally to ensure the adequate functioning of this new market. Make no mistake: Carbon credits and debits are on a path to becoming the currency of climate change. READ MORE

ON THE BORDER: (Politico’s Morning Energy)

Biden’s biggest G-7 climate obstacles –… Trade Issues (Politico’s Morning Energy)

ABOUT THOSE CARBON BORDER TARIFFS: (Politico’s Morning Energy)

Carbon Border Taxes Face Debate, Unjust or Necessary? (Our Daily Planet)

Excerpt from Politico’s Morning Energy: ON THE BORDER: A group of Republican senators, including Lisa Murkowski of Alaska, Mike Braun of Indiana, Mitt Romney of Utah and Susan Collins of Maine, are toying with legislation to implement border carbon adjustments, E&E News reports. It’s a move that moderate Republicans are hoping to present as a U.S. business-friendly gateway into climate action, specifically targeting competition from China. The Biden administration has also expressed interest, and the European Parliament is pushing its own version as well. READ MORE

Excerpt from Politico’s Morning Energy: Biden’s biggest G-7 climate obstacles— Trade issues:Carbon tariffs on imported goods is expected to pop up at the summit, even though it’s not on the official agenda. Biden backed a carbon border tax during last year’s campaign, but his special presidential climate envoy, John Kerry, has cautioned the European Union against that approach, as it could burden U.S. manufacturers. READ MORE

Excerpt from Politico’s Morning Energy: ABOUT THOSE CARBON BORDER TARIFFS: Senior Senate Democrats still don’t have firm details on a carbon border fee as part of their party-line spending measure, but they vowed whatever they come up with will help protect American workers, Pro’s Anthony Adragna reports.

“The devil’s in the details. And we are nowhere near details,” said Sen. Sheldon Whitehouse (D-R.I.), who’s got legislation that he says would help U.S. manufacturing by targeting China, the world’s largest emitter, and pass muster with World Trade Organization rules.

As a refresher: These are a lot of the same questions that came up around Europe’s announcement of a carbon border adjustment this week, which prompted consternation from the Biden administration of possibly tainting the transatlantic climate partnership. READ MORE

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