Sort by

Can a Carbon Tax Happen Here?

That the world's first government to back a plan that "regulates the creation and trade of carbon credits from farming and forestry" should be Australia's is no surprise. The country's GDP may be a rounding error compared to the U.S.'s, but it has for years been on the forefront of innovation, scientific and otherwise. Its list of accomplishments is a long one -- the notepad, the feature film and the ultrasound scanner are but a few -- and a proposal laying the groundwork for pricing carbon emissions is a worthy addition.

Hopes for something similar in the U.S. -- or, really, anything to raise the price of carbon -- have seemed dim lately, following the defeat of a climate change bill in Congress last year. But things may be changing amid the intense focus on deficit reduction and a number of plans both progressive and -- remarkably -- conservative, seek to raise revenues through some kind of carbon tax. For instance, a plan from The Center for American Progress would slash the deficit:

while boosting clean energy research and deployment funding roughly $10 billion a year — and instituting a high and rising CO2 price.  The plan achieves the CO2 reduction targets from the 2009 House climate and clean energy jobs bill (Waxman-Markey):  A 42% cut (from 2005 levels) by 2030, and 83% cut by 2050.

As CAP was flabbergasted to note, their plan is "strikingly similar" (where revenue is concerned) to that offered by the American Enterprise Institute, a think tank with politics so rigid as to preclude David Frum -- who is no one's idea of a liberal. Here's the relevant portion of AEI's plan:

The tax would be similar to Revenue Option 35 in the Congressional Budget Office’s March 2011 Budget Options book, but would be implemented as a tax rather than as a cap-and-trade program. The tax would take effect in 2013 and be phased in at a uniform pace over five years, so that the 2017 tax equaled the level prescribed for that year in the CBO option, slightly more than $26 per metric ton of CO2equivalent. As prescribed in the CBO option, the tax would thereafter increase at a 5.6 percent annual rate through 2050.

(As it happens, this wasn't entirely new ground for AEI, which only a year before published an energy policy proposal calling for a carbon tax.)

Both CAP's and AEI's plan were preceded by Rep. Pete Stark (D-Calif.), whose relatively progressive 2009 plan would have, per Grist, "taxed carbon dioxide emissions from coal, oil, and natural gas at an initial rate of $15 per ton, with the tax increasing in each successive year." H. R. 1337, "would have generated about $80 billion in the first year after its enactment, and created $600 billion in new revenues over 10 years."

(The budget plan developed by Demos, EPI, and the Century Foundation, would also impose a carbon tax, raising over $500 billion in the next decade.)

So, what are the odds of the U.S. implementing a carbon tax? The short-term outlook is bleak. Consider this: Despite cover from conservative think tanks, it's almost certain no Republican candidate for president will offer support of the kind Mitt Romney gave last year. Just yesterday, Romney jettisoned this position, too, saying he refuses to "spend trillions of dollars on something I don't know the answer to." (By which he presumably means climate change.) However, as

ny progress will have to wait until after the election, in the event that Obama wins. At the moment, the President has little leverage, but he would regain it in 2013 when the Bush tax cuts are due to expire. As Joe Romm notes, Obama will have his opponents over a barrel and, more than likely, willing to do pretty much anything to avoid a tax hike.

In the meantime, let's keep an eye on Australia. The Prime Minister is being pilloried, after the Liberal State Government stoked fears that Western Australians wouldn't be sufficiently compensated to offset the cost of the plan. Elsewhere, Parliament has been surrounded by protesting truckers, who also are none too pleased.