Even as Democrats and Republicans grapple over the inclusion of key climate investments in the infrastructure bill and budget reconciliation package, Senator Ben Cardin (D-Maryland) said there is growing bipartisan support to implement a carbon tax, to hold fossil fuel companies accountable.
In an interview with Yahoo Finance, Cardin said lawmakers from both parties now see carbon pricing as an "important part of the U.S. climate agenda" to reign in the biggest emitters of greenhouse gas emissions.
“I think there should be a price associated with carbon emissions because of the cost of remedy,” Cardin said. “We can come together on a climate agenda and taxing carbon is one of the areas that brings us together.”
The urgency to price carbon has only been heightened by a recent report from the UN’s Intergovernmental Panel on Climate Change (IPCC), placing the blame for global warming squarely on human activity. The roughly 4,000-page report concluded the impacts from climate change are so severe, global temperatures and the effects from warming will only get worse over the next three decades, regardless of climate mitigation measures implemented.
A carbon tax specifically imposes fees on businesses that emit greenhouse gases and carbon dioxide, to discourage the use of fossil fuels. The burden is intended to fall largely on oil and gas companies, with the resulting revenue being used to invest in clean energy, and offset pollution.
'Putting a price on carbon'
But critics worry the fines will result in higher fees for customers, squeezing low- and middle-income households. For example, the Tax Policy Center reports a tax of $40 per ton would add roughly 36 cents to the price of a gallon of gasoline or roughly 2 cents to the average price of kilowatt-hour of electricity.
White House officials have publicly said they prefer a clean electricity standard to reduce emissions, although President Biden hasn’t ruled out a tax to advance larger climate goals.
“The president has said that no one under $400,000 will pay additional taxes. I think we all support that. So, it's a little bit challenging as to how we design the build to carry that out,” Cardin said. “But putting a price on carbon is an important step forward to recognize what carbon is doing to our environment”
Support for carbon pricing from the fossil fuel industry has only added to the skepticism. In March, the industry’s largest trade group, the American Petroleum Institute endorsed market-based pricing of emissions, marking a dramatic shift after years of resisting regulations. In May, a lobbyist for Exxon Mobil (XOM) was recorded on video, saying the oil giant only supported a carbon tax “as an easy talking point” and an “advocacy tool.”
“Nobody is going to propose a tax on all Americans, and the cynical side of me says, yeah, we kind of know that. But it gives us a talking point that we can say, well, what is ExxonMobil for? Well, we’re for a carbon tax,” said Keith McCoy, a senior director in Exxon’s government affairs team, in a conversation with Greenpeace. He reiterated on tape, “A carbon tax is not going to happen.”
Democratic lawmakers, led by Sen. Van Hollen (D-Maryland) have already introduced legislation, requiring the largest U.S.-based fossil fuel extractors and oil refiners and foreign-owned companies doing business to pay into a climate fund based on a percentage of their global emission.
With less than two months to go until international climate talks begin at the UN Climate Change Conference of the Parties (COP26) in Glasgow, the U.S. faces growing pressure to step up climate action, as the world’s second largest emitter of greenhouse gas emissions.
“We're trying to get America to understand and be at the forefront of leadership to transition us to an energy source that will help us deal with our environment,” Cardin said. “It's good for our economy. It's good for our national security.”
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita
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