An Obama administration official said Nov. 13 the president will not lead an
effort to tax the carbon content of fuel in upcoming talks over avoiding the
“fiscal cliff,” saying the onus is on Republicans to first show they could
support such an approach.
“I just want to be clear, the administration has not proposed--nor is it
planning to propose--a carbon tax,” Gilbert Metcalf, the deputy assistant
treasury secretary for environment and energy, said at an economic forum on
Metcalf said “any legislative effort to address the risk of climate change
will have to have bipartisan support.” He suggested that carbon tax advocates
would need to demonstrate that Republicans would be open to the idea before
serious talks could begin.
“If there is a desire on the part of Republicans as far as the fiscal reform
[negotiations] to include discussions of the carbon tax, then the president is
ready to work with Republicans on these issues, ” Metcalf said.
On the heels of the Nov. 6 elections that returned Obama to the White House
and extended the Democratic majority in the Senate, environmental groups see an
opening for resurrecting action on carbon as Congress turns its attention to the
“fiscal cliff” of automatic tax hikes and spending cuts set to go into effect in
Metcalf also weighed in on the European Union's decision to delay the
extension of its carbon dioxide Emissions Trading System to U.S. airlines. Both
the Republican-controlled House and the Democratic-controlled Senate have passed
bills to block the EU plan. The EU's one-year delay gives the International
Civil Aviation Organization additional time to negotiate a broader deal to cut
aviation emissions (see related story).
“We have been opposed to the unilateral approach” the European Union had
taken to include U.S. and other foreign carriers in the carbon trading plan,
Metcalf said. “It is heartening” to hear that plan may be delayed, “and I think
there is a recognition that there are appropriate venues” for negotiating
emissions limits for the air sector.
Meanwhile, the House gave final approval Nov. 13 to a bill (S. 1956) that
would bar U.S. airlines from participating in the EU emissions trading plan. The
bill passed by voice vote and now goes to President Obama for his signature (see
The fact that three think tanks from across the political spectrum held the
Nov. 13 carbon tax forum--the conservative American Enterprise Institute, the
liberal Brookings Institution, and independent think tank Resources for the
Future--spurred some to suggest the forum itself was a signal of renewed
interest in carbon tax policies.
Energy industry representative Frank Maisano said the forum gave the carbon
tax “some policy street cred” on the heels of the Nov. 6 elections--even if he
and other industry representatives say carbon taxes are dead on arrival in
“I remain highly skeptical of any new energy tax,” Maisano, an energy
specialist with Bracewell & Giuliani, told BNA during the forum, “even if
passed with offsetting tax reductions elsewhere.”
In contrast, many of the speakers at the forum--including officials from the
International Monetary Fund and Joseph Aldy, formerly a special assistant for
energy and environment for President Obama--argued that a carbon tax offers a
host of benefits.
They and other supporters said a carbon tax is far less complex than the
cap-and-trade approach Obama and other Democrats supported from 2009-2010.
Supporters said a carbon tax would allow reductions in other economically
inefficient taxes such as payroll and income taxes that act as disincentives for
economic growth and that it could raise up to $90 billion in new revenue in its
Aldy, now an assistant professor of public policy at Harvard's John F.
Kennedy School of Government, said there is a certain irony to carbon taxes
returning to the spotlight in the United States, more than 15 years after
European nations touted such taxes as the best approach for cutting global
greenhouse gas emissions.
The United States, by contrast, was in the 1990s a strong advocate of a
cap-and-trade approach for addressing emissions, Aldy noted. The European Union
was ultimately convinced to adopt the U.S.-favored approach and created the EU
Emissions Trading System, Aldy said, but the United States then abandoned its
own approach with the defeat of Senate cap-and-trade legislation in 2010.
By Dean Scott
More information on the AEI/Brookings Institution/RFF economic forum on
carbon taxes is available at http://www.aei.org/events/2012/11/13/understanding-the-economics-of-carbon-taxes/.