Congress to Consider Carbon Fee Legislation
Bi-partisan legislation under which a fee would be assessed on production or importation of certain fossil fuels as a means of reducing greenhouse gas emissions has recently been introduced in the U.S. House of Representatives by Rep. Ted Deutch (D-FL), and co-sponsored by Reps. Brian Fitzpatrick (R-A), John Delaney (D-MD), Francis Rooney (R-FL) and Charlie Crist (D-FL). Under this legislation, entitled the Energy Innovation and Carbon Dividend Act of 2018 (H.R. 7173), the fee would be collected, in the case of coal, from coal mining operations in the U.S. and importers of coal; in the case of crude oil, from refineries in the U.S. and importers of petroleum products; and, in the case of natural gas, from any entity supplying natural gas into the natural gas transmission system, and any importer of natural gas. This legislation has been referred for consideration to the House Ways and Means Committee, as well as the House Committees on Energy and Commerce and Foreign Affairs.
Most experts agree that greenhouse gas emissions from sources in the United States and elsewhere are contributing to adverse changes to the climate, with the potential to cause flooding along the coasts of the United States and an increase in storm violence. The goal of the legislation is to encourage market-driven innovation of clean energy technologies and market efficiencies which will reduce harmful pollution. The legislation resembles closely a proposal for reduction of greenhouse gas emissions that was endorsed by former Secretary of State James A. Baker III and other prominent Republicans in February 2017.
Imposition of a fee on enterprises contributing to the level of greenhouse gas emissions in the U.S., such as that proposed in the Energy Innovation and Carbon Dividend Act of 2018, is intended to create financial incentives for affected businesses to reduce their reliance on fossil fuels with high greenhouse gas content in an economically efficient manner. The concept has been touted as a free-market solution to climate change, and, if enacted, the legislation would provide an alternative to the complex administrative program for regulating greenhouse gas emissions through the Clean Power Plan, implementation of which has been delayed indefinitely.
Notwithstanding the recognition that increased emission of greenhouse gas during the latter half of the 20th Century has caused adverse climate changes, voters have been reluctant to support adoption of fees as a means of reducing greenhouse gas emissions. In the November 2018 elections, voters in Washington State rejected a ballot initiative that would have imposed a fee on carbon dioxide emissions, presumably because the fee would have resulted in higher energy prices. The Energy Innovation and Carbon Dividend Act of 2018 is designed to overcome this reluctance by providing for distribution of substantially all of the revenues collected through the carbon fee on a pro-rata basis, primarily to adults who are citizens or residents of the United States, to offset any potential increase in energy prices.
Although there is bi-partisan support for the Energy Innovation and Carbon Dividend Act of 2018 in the House of Representatives, it is unlikely that this legislation will be enacted in the near future. Even if the legislation is approved by the House of Representatives, there is no indication that the legislation would be able to gain support in the Senate and signed into law by President Trump. Nevertheless, the introduction of this legislation in the House, and associated Congressional hearings designed to illuminate the problems caused by climate change and the potential for mitigating those problems in an economically efficient manner, might lead to enactment of similar legislation in the future.