April 10, 2019

Whitehouse, Schatz, Heinrich, Gillibrand Introduce Updated Carbon Fee Amid Energized Climate Debate

Bill would return revenue to the American people, speed transition to green energy

Washington, D.C. – As members of Congress engage in a newly energized conversation about reducing carbon pollution, Senators Sheldon Whitehouse (D-RI), Brian Schatz (D-HI), Martin Heinrich (D-NM), and Kirsten Gillibrand (D-NY) today reintroduced legislation to place a price on the emissions driving climate change and putting Americans’ health and the global economy at risk.  The American Opportunity Carbon Fee Act would reduce the nation’s greenhouse gas emissions by an estimated 51 percent by 2029 compared to 2005 levels.  It would simultaneously generate an estimated $2.3 trillion over 10 years to boost the economy and aid American workers and consumers. 

“Nearly every economist who has seriously studied climate change has concluded that a carbon fee needs to be a big part of the solution,” said Senator Whitehouse.  “A carbon fee will unleash the power of the markets, reducing emissions by making polluters pay the American people for harm caused by their products, and boosting carbon reduction industries by strengthening their business case.  Every American family stands to benefit: from the direct revenue generated by the fee; from a healthier environment; and from a stronger, more sustainable economy.”

“A price on carbon pollution is one of the best options we have for bipartisan action, and it is one of the best options we have for tackling climate change,” said Senator Schatz. “By putting a price on pollution, our bill provides a market-based solution for dealing with the planetary emergency that is climate change.”

“The latest science provides us with clear and indisputable evidence that the destructive wildfires, catastrophic hurricanes, and extreme flooding we are experiencing are directly linked to our greenhouse gas pollution,” said Senator Heinrich.  “We don’t have any more time to waste in finally implementing real solutions to eliminate this pollution.  Our bill would do just that and use the revenues generated to assist American workers, veterans, and retirees and invest in strategies to transition toward an economy run 100 percent on clean energy.”

Carbon pollution from human activity is changing our climate and harming our economy, health, and environment.  The United States is currently the second-largest source of carbon pollution in the world and has emitted more carbon dioxide than any other nation in history.

To ensure emitters are held responsible for the harm they offload onto the American people, the American Opportunity Carbon Fee Act would assess a fee on fossil fuels and other sources of greenhouse gases.  The fee would start at $52 per metric ton of emissions in 2020—the mid-range of the Obama administration’s 2016 estimates of the “social cost of carbon,” which measures the long-term damage done by carbon pollution—and increase annually by 6 percent over inflation.

The fee 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.  It would be adjusted to account for methane emissions from venting, carbon dioxide from flaring, and other greenhouse gas emissions that escape throughout fossil fuel supply chains.  The Treasury Department would assess and collect the fee, and impose border adjustments to level the playing field for manufacturers of energy-intensive goods. 

A growing number of prominent Republicans have come out in support of a carbon fee, including former Treasury Secretaries James Baker, George Shultz, and Henry Paulson; former Environmental Protection Agency Administrators William Ruckelshaus, Lee Thomas, William Reilly, and Christine Todd Whitman; former Federal Reserve Chairs Alan Greenspan and Ben Bernanke; and leading economists and former presidential economic advisors Arthur Laffer, Gregory Mankiw, and Douglas Holtz-Eakin.  Multiple carbon fee proposals have been introduced in the House of Representatives with Republican support.

According to the independent, nonpartisan think tank Resources for the Future, the bill would reduce energy-related carbon dioxide emissions by 51 percent compared to 2005 levels by 2029.  Resources for the Future found that by the middle of the next decade, the bill would lead the United States to beat carbon emissions targets outlined in the 2016 Paris Agreement pledge and deliver more than twice the utility-sector carbon reductions by 2030 than the Obama administration’s Clean Power Plan.

The revenue generated through the fee—over $2 trillion in the first decade—would be used to:

  • Offer workers an annual inflation-adjusted $900 refundable tax credit to offset payroll taxes paid (with comparable payments for Social Security and veterans beneficiaries); and
  • Deliver at least $10 billion annually to the states to assist them in dealing with the costs of climate change and transitioning to a low carbon economy.

American companies like Procter & Gamble, General Motors, PepsiCo, and ExxonMobil have announced support for a “gradually rising” carbon fee—not unlike the American Opportunity Carbon Fee Act.  The corporations and conservative leaders took out a full-page ad in the Wall Street Journal in June 2017 stating that such a plan “would achieve significantly greater emissions reductions than all current and prior climate regulations, while helping America’s businesses and workers get ahead.”


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Meaghan McCabe, (202) 224-2921