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Here it comes! Dems to Propose Carbon Tax Bill
August 2, 2012

Posted by Matt Dempsey

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McDermott pushes carbon tax

By Erica Martinson

8/2/12 5:31 AM EDT

These days in Congress, climate change is a question. Rep. Jim McDermott says a carbon tax is the answer.

McDermott (D-Wash.) will introduce a bill Thursday to create a carbon tax that he says will create incentives for long-term changes in the American energy market without harming the economy, and in fact providing much-needed revenues.

“A carbon tax is simple to administer and easy to understand. Over time, the price of carbon emissions is increased, which in turn, creates a market incentive to reduce emissions,” according to a fact sheet provided by his office.

McDermott doesn’t expect his legislation to move soon, he told POLITICO, but he wants to get the idea stewing in advance of possible tax reforms.

In politics, “you plant seeds. You put ideas out there and you let people think about” it, he said. “If someone has a better idea, I’m willing to consider it. I think that when we come back in January, we talk about tax reform. I don’t want it to be thrown on the table” at the last minute.

“So I’m putting it out there as a think-piece," he said.

With so many people around the country suffering from drought, he said, it's the perfect time to start the discussion.

Still, he's bucking some big trends.

Since the slow death of cap and trade, Congress has been loath to pick up the issue of reducing greenhouse gas emissions — and to some degree, short on ideas.

Don’t call it a comeback, but climate change has been on the collective congressional mind this week.

The Senate environment committee held its first hearing in years on the state of climate change science, and Sens. Bernie Sanders (I-Vt.) and John Kerry (D-Mass.) took to the Senate floor to champion a need for action. On the other side of the debate, Sen. Jim Inhofe (R-Okla.) — the man who literally wrote the book on climate change skepticism — has been pressing the issue even more than usual lately, making several floor appearances.

And several environmental groups have increasingly sought to make climate change a campaign issue. Some conservative thinkers even got together recently to kick around the idea of a carbon tax.

On the other hand, any new tax is a poison pill to many lawmakers, especially tea party freshmen.

But McDermott said using electricity from carbon sources has a cost too, in terms of health and climate effects.

“We’ve got to figure out what the cost of the energy is and factor all the cost in," he said. "We’ve never done that with oil. And we’re putting the U.S. military out there protecting the oil from Iraq and Nigeria.”

The legislation would set a carbon tax through a 5-year permit price, with annual permits set five years out.

The price system, according to a write-up of the bill, will react to volatility in energy markets, and set specific goals for emission reductions and deal with the impact on energy costs with dividend payments to the public.

The bill would set a schedule for reducing CO2 emissions by 80 percent of 2005 levels within 42 years.

The goal is to reduce demand for carbon-based fossil fuels by driving up price — including for international sources of products, such as cheaper Chinese steel.

The new bill is similar to carbon tax legislation that McDermott  filed in the 111th Congress, but with several key differences.

Permits would be for a quarter-ton of CO2 equivalent, rather than 1 ton. There would be no limit on the number of permits, and the secretary of the Treasury could lower the price at any time, though there would be a two-year delay for raising the price, according to a side-by-side produced by McDermott’s office.

Seventy-five percent of the revenue would have to be used for dividend return and 25 percent for deficit reduction. The previous legislation did not specify the use.

The lawmaker argues that those changes, in part, make now a good time for a carbon tax, given deficit shortfalls. 

“Nothing’s going to happen between now and the election. I wouldn’t mind it being debated in the campaign,” he said. “It’s an issue that I think the country needs to face.”

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