by Matt Kasper
On Thursday, Rep. Jim McDermott (D-Wash.) introduced a bill that would force fossil fuel producers to pay for their carbon dioxide emissions. It is the latest attempt by Congress to put a price on carbon.
The Managed Carbon Price Act of 2012 (MCP) would grant the U.S. Treasury Department authority to issue permits representing one-quarter ton of CO2. Unlike the cap-and-trade legislation that failed in the Senate in 2009, the MCP does not allow permits to be traded. Rather, they can only be purchased or refunded from Treasury.
McDermott said in a statement:
What seems to have fallen by the wayside is concern over the climate and how carbon emissions are playing a factor in the extreme weather conditions we have been seeing. My colleagues are seeing this in their districts. Just yesterday, the USDA said that half of the counties in the United States – 1,584 counties – had been deemed ‘natural disaster areas’ with 90% of those counties listed due to drought conditions. We can’t keep ignoring these major environmental issues, and this proposal addresses emissions reductions in an economically responsible way.
The revenue generated from the carbon tax would be put into a public trust fund with 25 percent of funds going to pay down the deficit and the rest to subsidize any rate increases consumers might face.
The MCP would specifically tax the producers of coal, natural gas, oil and gas refineries, and cover other industrial emitters of greenhouse gases.
As for the price of carbon, McDermott has been citing a recent Brookings Institution report that analyzed the starting price set at $15 per ton. If carbon was priced at that amount, Brookings estimates that $80 billion would be raised in the first years of implementation, rising to $170 billion in 2030 and $310 billion by 2050.
McDermott is hoping that this bill will also be supported by Republicans in Congress. He added:
Mitt Romney’s Economic Advisor Greg Mankiw, Exxon-Mobil, the American Enterprise Institute and other conservatives have backed this concept because they know we have to wean ourselves off of carbon emitting energy sources, and do it in a way that doesn’t hurt our economy and makes sense for businesses.
McDermott is a senior member on the House Ways and Means Committee, the body responsible for writing tax law.
Matt Kasper is a special assistant for energy policy at the Center for American Progress.