Sens. Coons, Flake introduce revenue-neutral carbon tax legislation

US Sens. Chris Coons (D-Del.) and Jeff Flake (R-Ariz.) introduced a bill on Dec. 20 which would establish a public carbon dividend trust fund to encourage market-driven innovation of clean energy technologies and market efficiencies to reduce harmful pollution. US Reps. Ted Deutch (D-Fla.), Francis Rooney (R-Fla.), John Delaney (D-Md.), Brian Fitzpatrick (R-Pa.), and Charlie Christ (D-Fla.) offered similar legislation in the House.

“Climate change is a serious threat to our economy, our security, and our way of life, and we need leadership from all parts of our society and government to tackle it,” Coons said. “Putting an economy-wide price on carbon and other greenhouse gases is a comprehensive way to reduce emissions, spur innovation, and create jobs. I hope will continue to have bipartisan conversations about addressing this issue.”

“With the administration’s recent climate assessment and skeptical response from the president, Republicans need to be at the forefront of addressing climate change,” Flake added. “[S. 3791] is bipartisan, revenue-neutral carbon tax legislation that provides an honest path to clean energy. This free market solution will reduce carbon pollution and encourage American innovation.”

The bill would impose a $15/tonne upstream carbon tax which would increase $10/year. It would rebate revenue to the American public as a monthly dividend. An equal share would be provided to all adults with a social security or taxpayer identification number. Children would receive a half share. The first payment would be made one month in advance so families and households can cover any energy cost increases.

Fossil fuels and carbon intensive imported goods would be subject to an equalization tariff if their country of origin does not price carbon. Exported goods would receive a tax refund to prevent any emissions-intensive domestic producers from facing any disadvantage relative to overseas competitors. This provision is also designed to comply with Word Trade Organization rules, the senators said.

They said that the bill would preserve the US Environmental Protection Agency’s authority to regulate greenhouse gas emissions under the Clean Air Act and allow EPA to review greenhouse gas regulations after 6 years as long as S. 3791’s emissions reduction targets are being met.

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