- The Washington Times - Tuesday, April 7, 2009

The carbon tax — an idea long favored by environmentalists to reduce pollution — has started to make a quiet comeback among leading Democrats on Capitol Hill despite being shunned by lawmakers in the past who were wary of the word “tax.”

As action on a carbon trading proposal — considered an alternative to a plain carbon tax and favored by President Obama, Speaker Nancy Pelosi and Senate Majority Leader Harry Reid — has sputtered and stumbled through Congress, carbon-tax advocates have pushed their alternative.

Tax supporters, including former Vice President Al Gore and NASA climate scientist James Hansen, have questioned the complexity of a cap-and-trade plan, saying a carbon tax is much simpler, would make it easier for businesses to factor in increased costs and still reduce greenhouse gasses.

A cap-and-trade plan would set a hard limit on carbon emissions and build a market for companies to trade allowances, while a carbon tax would apply a levy on emissions.

Rep. John Larson, Connecticut Democrat and the fourth-ranked Democrat in the House leadership, introduced a plan last month to levy $15 per metric ton of carbon dioxide and return the money to taxpayers. He has long advocated for a bare-bones carbon tax.

“Unlike a cap-and-trade system, my carbon tax would create no complex new bureaucracies or complicated auction schemes,” Mr. Larson said in a statement last month.

Despite the carbon tax's simplicity, Democratic leaders have tended toward the cap-and-trade plan on grounds that it carves a moderate path necessary to win political support.

“A carbon tax is the surest way to fix prices, while cap-and-trade is the surest way to meet environmental goals,” said William Whitesell, director of policy research at the Center for Clean Air Policy, at a hearing last month.

In the House, a turf war has developed between Energy and Commerce Committee leaders who introduced a cap-and-trade proposal last week and Ways and Means Committee leaders who argue that any measure that brings money into federal coffers falls under their jurisdiction.

Ways and Means Committee Chairman Charles B. Rangel, New York Democrat, has led hearings over the past two months and debated the merits of a carbon tax as an alternative to the cap-and-trade plan introduced last week.

Rep. Peter Stark, California Democrat and carbon-tax supporter, questioned last month whether a trading plan would be supported as a replacement for other straight-ahead taxes, such as the gas tax.

“I go back and I think, for instance, gas taxes,” Mr. Stark said during a hearing convened by Mr. Rangel. “This committee collected an awful lot of gasoline taxes, which eventually get spent by the states to build roads pretty much. I don't see any reason why we couldn't change that to a cap-and-trade and let the states swap their right to tax gasoline.”

Still, the carbon tax faces large hurdles because most Democratic leaders have lined up behind a cap-and -trade plan.

Mrs. Pelosi's climate point men, House Energy and Commerce Committee Chairman Henry A. Waxman of California and subcommittee Chairman Edward J. Markey of Massachusetts, introduced a cap-and-trade plan last week based loosely on the U.S. Climate Action Partnership's proposal.

While the business community has hesitated in rallying strongly for climate change legislation — the U.S. Chamber of Commerce has taken a wait-and-see approach — many companies have signed on with United States Climate Action Partnership and cap-and-trade supporters.

Still, some businesses, most notably ExxonMobil, are calling for a carbon tax instead of a trading plan.

“If you accept the goal that there is a need to reduce greenhouse gas emissions, then to us, the much more effective and sensible way to do it is with a market-based cap-and-trade system,” said Sen. Joe Lieberman, Connecticut independent, who has drafted two bipartisan measures over the past decade.

“With the tax on carbon, you're not sure what you're going to get other than higher taxes,” he said.

Cap-and-trade supporters are likely to have the most trouble in the Senate, where they will have to muster 60 votes to break through a filibuster attempt and where moderate Democrats and swing-vote Republicans hold more sway in the debate.

“I don't have to choose between two positions I don't agree with,” said Sen. Ben Nelson, Nebraska Democrat, when asked whether he would support a cap-and-trade plan or a carbon tax.

Mr. Nelson, who joined with moderate Republican Sens. Susan Collins and Olympia J. Snowe of Maine to negotiate passage of the $787 billion stimulus plan, said the cap-and-trade debate is premature.

Renewable fuel sources need time to come online before lawmakers start weighing how to curb traditional energy sources, he said.

“I think the stick can be heavy-handed — even if its not heavy-handed and utility rates go up, there are going to be an awful lot of people who are unhappy,” he said.

During a Senate hearing in February, Mr. Gore and Sen. Bob Corker exchanged niceties about the carbon tax, which Mr. Gore had pushed when he was a senator from Tennessee. However, Mr. Gore hedged when it came to picking between the tax and a cap-and-trade plan.

“I know there's a lot of discussion as if it's occurred,” Mr. Corker said last month about the de facto coronation of cap-and-trade by Washington's Democratic leaders. “I think the debate is far from over. I think you have a lot of moderate Democrats that have great concerns about the type of cap-and-trade that has been discussed in the past.”

Mr. Corker, Tennessee Republican, said any climate plan should return all money collected to taxpayers.

Cap-and-trade supporters have said their system is the best option for curbing greenhouse gas emissions and political opposition, questioning Republican support for a tax.

“I've heard several people in the Senate talk with affection about a tax on carbon, and almost without exception, none of them would ever vote for it,” said Sen. Thomas R. Carper, Delaware Democrat. “There's an irony there, and I hope it's not lost on the rest of us.”

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