Carbon Pricing Reaches U.S. House's Main Tax-Writing Committee

Updated: Jun 1

Less than a year ago, a Republican-controlled House of Representatives denounced a carbon tax plan. Now, it's discussing a carbon tax plan that is supported by some influential Republicans.

Cartoon rendering of carbon tax. SRC: Foundation for Economic Education

A coalition of businesses and environmental groups worked with some major oil companies to bring a carbon tax bill to the House on Wednesday, May 15. It's the first talk of climate change by the Ways and Means Committee in a dozen years. For the panel to even be discussing climate change is monumental, and symbolizes that a carbon tax is in the realm of possibility.


Democrats heard the proposal to explore "the economic and health consequences of climate change." Committee Republicans, meanwhile, sought to convey serious concern about the costs of global warming, even though they opposed any solution that included a tax.


According to Ted Halstead, chairman and CEO of the Climate Leadership Council, the plan is not a carbon tax. It is a dividend. He called the proposal a "grand bargain" for the oil companies, in which they accept a tax on their carbon emissions in return for rolling back emissions regulations.


The plan would return all revenue to U.S. households in a dividend system. The quarterly payments would amount to about $2,000 in total per year for an average family of four, accounting for the raised cost of energy.



Committee Republicans Focus on Technology

Republicans on the committee did not dispute the need for climate solutions, for the most part, nor did they take issue with witnesses that spoke to the science of climate change. However, they did comment that the lack of affordable energy would become a problem for air conditioner electrical usage as heat waves heighten.


Some Republicans said that, in the long-term, carbon dividends would be self-defeating, with some people with the mindset of "I want my dividend" and then therefore promoting carbon. As an alternative, Rep. David Schweikert (R-AZ) and Rep. Tom Reed (R-NY) proposed an expansion of the tax credits for carbon capture technology that passed last year. Reed addressed himself as a "proud Republican" and stated that "unleashing the power of the market should be our top priority. We need to lead the world by our innovation and entrepreneurial spirit."


Other Proposals

A different carbon fee-and-dividend plan that includes less regulatory rollbacks and a sharper carbon fee is awaiting action by the Ways and Means Committee. That bill was introduced by Ted Deutch (D-FL) and Francis Rooney (R-FL), and it is backed by the grassroots advocacy group Citizens Climate Lobby. Their supporters were out in full force during the hearing and were in a live chat on YouTube during it.


Grover Norquist's Americans for Tax Reform opposed any carbon pricing plan, weighing in online. "Revenue-neutral does not mean that you raise taxes by $2 trillion and then send people green energy welfare apology checks," wrote Paul Blair, ATR's director of strategic initiatives, in the hearing chat. "That's a massive tax and spending scheme." ART's response gives a hint of the opposition carbon pricing faces from the ideological right in Congress, despite growing support from communities. Next week, CEOs and top officials from 75 top businesses are slated to go to Congress and promote carbon pricing.


But Rep. Don Beyer (D-Va.), sponsor of a carbon cap-and-dividend bill that also is awaiting action by the House Ways and Means Committee, said his office is far more likely to hear from businesses seeking tax breaks than seeking carbon pricing.


"The business community needs to be serious about this," Beyer said. "We know what it's like when the business community is invested in something, and the urgency isn't there on climate change." Turning to Halstead, Beyer said that carbon pricing won't advance in Congress without support of businesses like those that say they support the Climate Leadership Council's plan.


"Be serious about carbon pricing and come and knock on the doors of all 43 of us to make sure we support a carbon pricing bill," said Beyer. "There's going to be a hesitancy on the part of our Ways and Means Committee and the general Congress to vote for something that's a fee, that could be characterized as a tax, that could put us at risk in the next election. Having the cover of the corporations will be really, really essential."

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