Whitehouse Sees Carbon Fee Bill Boosting Climate Discussion with Republicans

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By Anthony Adragna

Nov. 19 — Carbon fee legislation introduced Nov. 19 will establish the baseline for productive bipartisan discussions on climate change in the next Congress, Sen. Sheldon Whitehouse (D-R.I.) said.

Whitehouse and Sen. Brian Schatz (D-Hawaii) introduced the American Opportunity Carbon Fee Act (no bill number available), which would require large greenhouse gas emitters to pay $42 for every ton of carbon pollution they emit beginning in 2015. The fee would increase annually by an inflation-adjusted 2 percent.

Under the bill, all revenue generated—an estimated $2 trillion over ten years—would be returned to taxpayers through a number of possible means, including economic assistance to low-income families, tax cuts and infrastructure investments.

“When we get back here under the Republican majority, there are some very significant opportunities here,” Whitehouse said. He said he introduced the bill during the lame duck session because he wanted to have established a baseline for discussions in the next Congress.

Sees an Opening

Whitehouse said Republicans would have to consider new approaches to addressing climate change—such as a carbon fee—if they wanted to be competitive in the 2016 elections. He said the 2016 electorate would be more favorable to climate action.

A “huge number” of Republican senators might ultimately be open to some sort of carbon fee, according to Whitehouse. He named Republican Sens. John McCain (Ariz.), Susan Collins (Maine), Jeff Flake (Ariz.), Mark Kirk (Ill.), Lindsey Graham (S.C.), Kelly Ayotte (N.H.), Ron Johnson (Wisc.), Rob Portman (Ohio) and Lisa Murkowski (Alaska) in particular.

There is “zero chance” a Republican could win the White House in 2016 if they continue to deny climate change, Whitehouse said. That carbon fee legislation is the best option is the “virtual unanimous consensus of the economic community,” the Rhode Island Democrat said.

Many businesses eventually might determine the simplicity and certainty associated with a carbon fee is a better deal for them and come to support the measure, Whitehouse said.

There are a number of ways of returning revenues that also could be beneficial to the business community, he said.

“I look forward to deciding with my colleagues on the best way to return the revenue, but I believe that every dollar should go back to the American people in some form,” Whitehouse said on the Senate floor introducing the legislation. “Here's one example to consider: We could cut the corporate tax rate from 35 percent to 30 percent. That's estimated to cost about $600 billion. Then we could give every single American worker an annual $500 payroll tax rebate for about $700 billion.”

Treasury Would Collect Fee

The Department of the Treasury would collect the $42 per metric ton fee beginning in 2015 and would receive input from the Environmental Protection Agency and Energy Information Administration to ensure the best research methods are utilized.

All coal, oil and natural gas produced in or imported to the U.S. would be subject to the fee, and large emitters of non-carbon greenhouse gases and carbon dioxide from non-fossil fuel sources also would be covered under the bill.

Whitehouse and Schatz's bill joins another proposal (S. 332) from Sens. Barbara Boxer (D-Calif.) and Bernie Sanders (I-Vt.) in utilizing some sort of fee to force industries to pay for their emissions.

That proposal, introduced in January 2013, would apply only to the several thousand coal, oil and gas producers, requiring them to pay a $20 per ton carbon fee, which would be increased 5.6 percent each year, compounded over a 12-year period. 

EPA Rules Help

Ongoing regulatory efforts from the EPA on carbon pollution from new and existing power plants help make “this a much better discussion,” Whitehouse said.

“The absolute holiday from any consequence from carbon pollution is over,” Whitehouse said. “The bill at this stage does not touch the EPA's existing regulatory authority, nor would I want it to unless it is really clear that there wasn't going to be any split or any gap.”

To contact the reporter on this story: Anthony Adragna in Washington at aadragna@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com