President Biden has remained noncommittal about a carbon tax although Democratic lawmakers are pushing the idea as a way to pay for some of the $2.25 trillion of the administration’s proposed infrastructure and green energy spending.
Former Secretary of State John F. Kerry, the administration’s climate czar, gave voice to the president’s dilemma last week during a trip to India.
“President Biden believes that at some point in time, we need to find a way to have a price on carbon that’s effective,” Mr. Kerry said. “He hasn’t decided or made an announcement about it, but I think going into the next months there will be a lot more talk about whatever tools are available to us and certainly, a carbon market is an important tool.”
A carbon tax functions as a surcharge on goods and services or industries that emit carbon dioxide, the primary greenhouse gas that contributes to climate change.
Generally, carbon-pricing proposals have been complicated by their broad impact. They tend to target nearly every consumer or industry emitting carbon. The plans usually fail to gain traction beyond environmentalist circles.
Opponents on both sides of the aisle also warn that a carbon tax would disproportionately affect the poor.
Mr. Kerry’s recent remarks notwithstanding, the Biden administration has not taken a firm stance on carbon taxing. In recent weeks, the White House’s domestic climate adviser, Gina McCarthy, said she would not rule out carbon-pricing but that the president’s focus was on different mechanisms to achieve net-zero emissions.
Some Democrats think the carbon-tax debate has shifted because of the $2.25 trillion infrastructure plan.
This month, 35 House Democrats introduced carbon tax legislation in hopes of injecting it into the infrastructure debate in Congress.
“The reason we’ve reintroduced this, the reason we’re having this discussion now is to make sure that a price on carbon is a part of these conversations,” said Rep. Ted Deutch, a Florida Democrat backing the measure.
Democrats, in particular, see a carbon tax as an attractive way to quickly raise revenue for the White House.
“There are a number of ways to view what contributes to greenhouse gas emissions,” said a Democratic congressional staffer. “With a carbon tax, you can devise a system in which a large number of people have to pay something for contributing to climate change. It’s not perfect, but it spreads the cost further and ensures there is more revenue overall.”
Such taxes also are enticing for Democrats politically since the surcharge increases in perpetuity every year until carbon emissions decrease.
“The most objectionable thing about a carbon tax is that members of Congress can vote on it once and it has an automatic escalator,” said Myron Ebell, the director of the conservative Competitive Enterprise Institute’s Center for Energy and Environment. “This means the tax keeps rising, but lawmakers don’t have to face voters on the issue ever again.”
Further adding to the allure of carbon-pricing is that increases to gasoline taxes, which have been used for decades to pay for infrastructure spending, may no longer be a viable alternative.
The Biden administration, in partnership with the nation’s largest automobile makers, is pushing for a phase-out of gasoline-powered cars in favor of electric vehicles.
Sen. John Barrasso of Wyoming, the top Republican on the Energy and Natural Resources Committee, said the hastening transition to electric vehicles changes the calculus of how to pay for new infrastructure spending.
“I think the focus has to be on the fact that you have electric vehicles more and more coming on the market and they pay nothing [toward highway and transportation funding] because they don’t use any gasoline, so people say well, ‘raise the gas tax,’” Mr. Barrasso said. “Yet more and more electric vehicles [are] pay nothing There has to be a role and a way to find out how to do that.”
The political landscape also has shifted around the carbon-tax debate.
The oil and natural gas industry, which long led the opposition to a carbon tax, now has endorsed it as a viable solution to climate change, provided it comes with some easing of regulations on the industry.
“As our industry accelerates efforts to advance groundbreaking technologies, reduce emissions and drive transparent and consistent climate reporting, we urge lawmakers to support market-based policies that foster innovation, including carbon pricing,” said Mike Sommers, CEO of the American Petroleum Institute, which represents industry giants including Exxon Mobil and Chevron.