Carbon Tax Gets a Hearing at a Conservative Think Tank

Sens. Sheldon Whitehouse (D-R.I.) and Brian Schatz (D-Hawaii) waded deep into enemy territory Wednesday by introducing their revamped carbon tax bill at a conservative think-tank, the American Enterprise Institute (AEI). The “American Opportunity Carbon Fee Act of 2015” would institute an across-the-board tax on carbon pollution.

Starting at $42 per metric ton, which is the government-recognized social cost of carbon pollution, the tax would increase 2 percent each year plus inflation until the U.S. achieves emissions reductions of 80 percent below 2000 levels. The fee is applied to companies as they extract fossil fuels and would fall more heavily on pollutants with denser concentrations of carbon.

Most scientists agree that an $82 per metric ton tax on carbon pollution is necessary to avert the worst effects of climate change. Costs unaccounted for include increased natural disaster expenses, increased health care costs, and adaptation technologies to protect coastal land from rising sea levels.

Whitehouse and Schatz are presenting a free-market solution to climate change that would complement the regulatory work of the Environmental Protection Agency, potentially making some regulatory actions unnecessary. Businesses would respond to the carbon tax by reducing carbon pollution or increasing the prices of goods. Consumers would then respond by consuming less (and therefore polluting less).

A study by Resources For the Future, a nonprofit that conducts economic-based research into environmental and natural resource issues, estimates this scheme would cut emissions by over 40 percent by 2025.

A big selling point of the bill is that it is revenue-neutral: All of the estimated $2 trillion collected by the tax would be returned to Americans in various ways: a cut in the capital gains tax, a refundable tax credit for workers, increased retiree benefits, and a small block grant to states for retraining displaced workers.

But why at AEI? As Schatz put it, “I never expected to be here.” But “this is an area that does demand conservative leadership.” Whitehouse added that the legislation is built on “core conservative economic principles” that a number of influential Republicans have supported. The senators were offering an olive branch to garner the bipartisan support necessary to take serious action on climate change.

What followed was an hour-long jovial discussion about whether anthropogenic climate change was real and if it constituted an actual threat to the Earth – ignoring the fact that 97 percent of scientists agree that warming trends have been caused by human activity.

It is clear that the Republican party still isn’t serious about fighting climate change. Republicans are continuing to battle President Obama’s EPA regulations in the Senate. The two Republican presidential candidates who recognize climate change as a threat are currently polling at 2 percent of the electorate – combined. And Republicans continue to rank climate change as dead last on their list of priorities (in a recent poll, only 18% said they wanted candidates to spend more time talking about the issue).

What quickly became clear at AEI is that the Republican intellectual establishment is also not interested. But this doesn’t make the bill irrelevant. Rather, Whitehouse and Schatz are incubating an important conversation about how best to address climate change in America.

The last serious attempt to pass comprehensive climate change legislation happened back in 2009, when the cap-and-trade bill spearheaded by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.) passed the House but narrowly failed in the Senate. It ran over 1,000 pages long and included tons of loopholes and giveaways to the oil and gas industry.

The “American Opportunity Carbon Fee” is a simple, clear solution that would work (it clocks in at 37 pages). It comes at a time when a majority of Republicans recognize that the government should be fighting climate change, and the legislation would effectively put America on a path to fulfill its international promises to reduce greenhouse emissions.

If not now, though, when will Republicans be ready? As they still debate about agreed upon science, the world reels.

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