Washington, D.C. – Today, at an event hosted by the American Enterprise Institute (AEI), U.S. Senators Sheldon Whitehouse (D-RI) and Brian Schatz (D-HI) unveiled new legislation to address climate change and boost the economy by putting a price on carbon pollution. The American Opportunity Carbon Fee Act, which will be introduced in the Senate today, would significantly lower U.S. greenhouse gas emissions while generating substantial revenue – all of which would be returned to the American people.
“This bill shows that acting on climate change need not be costly, and that protecting our environment and strengthening our economy can go hand in hand,” said Whitehouse. “As Republicans increasingly shift away from climate denial and toward potential solutions, I hope this bill can help move the conversation. A carbon fee follows conservative free-market principles in driving emission reductions and generates big economic benefits for American families and businesses. I hope my Republican colleagues will work with me on this bill in the weeks and months ahead, and I thank Senator Schatz for joining me.”
“We have solutions to climate change and one of them is putting a fair price on carbon pollution,” said Schatz. “Market mechanisms for reducing pollution work, and our bill returns all of the revenue to American families and businesses. Climate change can no longer be an issued championed by one party. We need bipartisan leadership, and market-based solutions have support across the ideological spectrum. Our bill will drive down emissions while correcting a market defect that has encouraged carbon pollution and stunted the development of clean energy. The price on carbon in our bill is predictable, straightforward to administer, and gets the reductions we need.”
The American Opportunity Carbon Fee Act would assess a fee on major sources of greenhouse gases. The fee would start at the Administration’s central “social cost of carbon” ($45/metric ton in 2016) and increase annually by 2 percent plus inflation, ensuring emitters would be held responsible for the harm they are offloading onto the American people. It would be assessed on fossil fuels when mined, processed, refined, or imported; on large emitters of non-fossil-fuel-based greenhouse gases; and on producers and importers of certain industrial gases with high global warming potential. The fee would be assessed and collected by the Treasury Department, and border adjustments would level the playing field for manufacturers of energy-intensive goods.
An analysis by Resources for the Future suggests that the bill would reduce U.S. CO2 emissions by more than 40 percent by 2025 compared to 2005 levels.
The Joint Committee on Taxation estimates that the bill would generate more than $2 trillion over ten years, which would be used to:
- Reduce the top marginal corporate income tax rate from 35% to 29%;
- Offer workers an annual inflation-adjusted $500 refundable tax credit to offset payroll taxes paid ($1,000 for married couples filing jointly);
- Provide Social Security and veterans’ program beneficiaries and other retired and disabled Americans with an inflation-adjusted annual benefit beginning at $500; and
- Allow states to deliver additional funds to low-income and rural households and workers transitioning to new industries. Rhode Island, for example, could expect approximately $66 million for these purposes in the first year alone.
Praise from Republicans
- Former Congressman Bob Inglis (R-SC), Executive Director of The Energy and Enterprise Initiative and republicEn: “Solving climate change involves bringing people together. That’s what Senator Whitehouse is doing by offering conservatives an olive limb, not branch, in pairing a carbon tax with corporate tax reduction. It’s a magnanimous move by Senator Whitehouse, and it’s an opportunity for conservatives to show how free enterprise can solve climate change.”
- William D. Ruckelshaus, EPA Administrator under Presidents Richard Nixon and Ronald Reagan: “Senator Whitehouse’s American Opportunity Carbon Fee Act embodies the economic principle that if you want to cause people to use less of something make it cost more. I have believed for years that if our country is to get serious about climate change we must make carbon more expensive. This bill does that and should be taken seriously by all Americans.”
- William K. Reilly, EPA Administrator under President George H. W. Bush: “I welcome Senator Whitehouse’s initiative in introducing legislation to address carbon emissions. Congress has a vital role to play as our country confronts the impacts of climate change, which will only worsen if we and the global community don’t get those emissions under control.”
*Supporting Documents:
– American Opportunity Carbon Fee Act – Bill Text
– American Opportunity Carbon Fee Act – One-Page Summary
###
