Lawmakers pursue ‘carbon tax’
Legislation introduced Thursday has been described by its sponsors as “the first step” toward a “carbon tax” in the form of climate tariffs.
Senators Chris Coons (D-Del.) and Kevin Cramer (R-N.D.) last week introduced the Providing Reliable, Objective, Verifiable Emissions Intensity and Transparency (PROVE IT) Act of 2023. They were joined by co-sponsors Sens. Angus King (I-ME), Lisa Murkowski (R-AK), Martin Heinrich (D-NM), Lindsey Graham (R-SC), John Hickenlooper (D-CO), Sheldon Whitehouse (D-RI) and Bill Cassidy (R-LA).
The PROVE IT Act of 2023 would require the Energy Department and Department of Commerce to compile a report on the “emissions intensity” of certain products made by the United States and other countries, as well as the US tariffs on those products. This list of “covered products” includes aluminum, cement, plastic, biofuels, cement, fertilizer, glass, hydrogen, natural gas, plastics, pulp and paper, copper, cobalt, graphite, manganese, iron, steel, plastic, crude oil, lithium-ion batteries, solar panels and wind turbines.
Coons and Cramer explained that the bill is only a stepping stone to a “carbon border adjustment mechanism” (CBAM), which would place extra tariffs on products that produce a certain amount of carbon emissions, either through their use or when being manufactured. The European Union passed its CBAM last month, and the new regulation is set to take effect in October.
“So given there’s a bipartisan group that was interested in moving forward on [a CBAM], I thought it was important that we introduce this piece and lay the foundation for the rest of the conversation,” said Coons.
Sen. Cramer agreed that the act is just a stepping stone to a CBAM, whose tariffs are expected to be passed down to the consumer. But if the plan is to work, he says, it is imperative that these extra costs are not seen as a “carbon tax”.
“It’s easier to take a second step once you’ve taken a first step,” said Cramer. “It can create a little momentum, but at the very least it creates a baseline from which to work, and it gets people thinking about it in a different context than, ‘Oh, my God, it’s a carbon tax.’”
Carbon taxes, a measure applauded by the World Economic Forum, are similar to CBAMs but are charged even on non-imported goods. About 35 cities around the world have implemented carbon taxes, which result in higher prices for products like gasoline and services like air transport.
According to recent surveys, American voters are becoming less willing to spend money to “fight climate change”. In 2021 most Americans (52%) said they would be willing to pay a $1 “carbon fee”. Just two years later, that number has dropped to 38%. An April survey found that support for a carbon tax drops as energy bills increase.
Nevertheless, lawmakers and corporate executives continue to push carbon taxes, which they say is an effective way to lower carbon emissions. In April, JP Morgan Chase CEO Jamie Dimon in his letter to shareholders expressed frustration with his fellow Americans for opposing a carbon tax.
“I also want to express exasperation with some of my fellow citizens who don’t pay the taxes they owe on the order of $600 billion a year, who won’t consider sensible policy measures like a carbon tax to stem climate change and who sometimes seem to only like democracy when the voters agree with them,” Dimon wrote.
In the letter, the finance executive went so far as to suggest the federal government seize private property to fight “climate change”.
“At the same time, permitting reforms are desperately needed to allow investment to be done in any kind of timely way,” Dimon added. “We may even need to evoke eminent domain — we simply are not getting the adequate investments fast enough for grid, solar, wind and pipeline initiatives.”
