A Carbon Tax Plan Proposal: What Are Its Prospects?

On Wednesday, Feb. 9, 2017, a group of prominent Republicans and business leaders¹ from the Climate Leadership Council released a carbon tax proposal entitled “The Conservative Case for Carbon Dividends.” Acknowledging “mounting evidence” of climate change and the need to “hedge against the risks associated with future warming,” the four-pronged proposal would impose a tax on carbon for oil, gas and coal use, which together comprise nearly 80 percent of total U.S. greenhouse gas emissions (GHGs). In a nod to industry preferences as well as conservative Republican principles, the proposal also contemplates the elimination of certain existing regulations aimed at reducing carbon dioxide emissions (CO2).

Cognizant that a carbon tax on producers would be felt by the American public, the proposal attempts to offset anticipated increases in consumer prices (e.g., likely increases in gasoline prices) with a quarterly dividend paid directly to U.S. taxpayers. The proposal endeavors to reduce uncertainty surrounding existing and potential future CO2 regulations. Notably, it also proposes the elimination of tort liabilities for coal, oil and natural gas emitters.

The Proposal (the ‘Plan’)