Boxer's push is a twist on carbon tax
by Carolyn Lochhead, The San Francisco Chronicle, February 13, 2013
Sen. Barbara Boxer's plan would impose a fee on carbon emissions at their source, such as coal mines, which would increase the price of fossil fuel energy. But instead of giving the proceeds to the government, three-fifths of the money would be refunded to residents. Photo: Paul Chinn, The SF Chronicle
Washington -- Sen. Barbara Boxer plans Thursday to co-sponsor a radical plan to control carbon dioxide emissions modeled on Alaska's rebates of oil royalties to residents.
The California Democrat is a marquee draw for an otherwise obscure bill by Sen. Bernie Sanders, a Vermont liberal and independent. Called "fee and dividend," the legislation is an unusual variant on a carbon tax. It would impose a fee on carbon emissions at their source, such as coal mines, raising the price of fossil fuel energy.
But instead of giving the proceeds to the government, three-fifths of the money would be refunded to U.S. residents.
Such rebates could run into hundreds of dollars. The idea is modeled loosely on Alaska's "permanent fund" that distributes royalties from the state's oil and gas industry to every Alaskan resident.
Boxer vows action
"We are going to move legislation through this committee," said Boxer, chair of the Environment and Public Works Committee, at a committee briefing by climate scientists on Wednesday. "It is going to make making sausage look pretty."
President Obama in his State of the Union address Tuesday urged Congress to pass a "market-based solution to climate change" but threatened to take executive action if Congress does not act.
The GOP-controlled House is very unlikely to even consider a carbon tax. The Boxer-Sanders bill is aimed at breaking ground in the debate and reflects a growing consensus among economists in favor of a carbon tax to tackle climate change, and possibly tax reform at the same time.
"We now all recognize the overwhelming consensus of scientists on climate change," said Adele Morris, policy director of the Climate and Energy Economics Project at the center-left Brookings Institution think tank. "It's time to do the same thing with the consensus of economists on what to do about it."
A carbon tax is simpler and more efficient than cap-and-trade schemes such as California's that put a price on carbon by capping emissions and letting companies trade permits to pollute.
Such a tax also would automatically induce businesses and consumers to limit their emissions without dictating how to do so, in contrast to government mandates that require higher fuel economy in cars or force utilities to buy wind and solar power.
The Sanders-Boxer bill would impose a $20 per ton tax on carbon or methane equivalent, rising 5.6% each year for 10 years, on the nation's largest fossil fuel producers. Imported fossil fuels from countries that do not impose a similar tax would also pay.
$1.2 trillion
The tax would raise an estimated $1.2 trillion over a decade and reduce greenhouse gas emissions 20% from 2005 levels. Three-fifths of the tax would be rebated to "every legal U.S. resident," which might make it more politically feasible than if it went to the government.
The rest of the money would go to incentives for clean energy and research.
A version of the "fee and dividend" idea is a favorite of NASA climate scientist James Hansen and climate activist Bill McKibben, founder of 350.org.
"We are treating the atmosphere like an open sewer because there is no cost on carbon pollution," James McCarthy, professor of biological oceanography at Harvard University, said at the committee briefing.
Morris said Republicans should find a carbon fee preferable to the new regulations Obama threatens to impose under the Clean Air Act.
"The Environmental Protection Agency is poised to go down that path," Morris said. "Those who have an aversion to regulation should take heed. If you want a market-based solution, do it now."
Chronicle staff writer David R. Baker contributed to this report. Carolyn Lochhead is The San Francisco Chronicle's Washington correspondent. E-mail: clochhead@sfchronicle.com
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