John Larson’s Energy Security Trust Fund Acts, which I’m lumping into two, the first was submitted in 2007 and then a follow up in 2009, and was recently re-introduced in July, provide a good roadmap of who we might begin thinking about taxing carbon, a policy that we must eventually embrace to get rid of fossil fuels. I’m not going to go into the exacting details of Larson’s bills and instead at the bottom provide the appropriate link for anyone to look them up, instead I’d rather focus on the broader strokes which provide a good framework / starting point.
The idea of a carbon tax is to encourage businesses of all kinds to find new ways to reduce their carbon emissions by acknowledging the external costs of buying fossil fuels and calculating them into the price of goods and services and tax specifically for those emissions. The trick of course is finding what the price of that tax should be, you don’t want to stifle the economy, but encourage it to change.
In the first year Larson’s tax would be $15 per ton of carbon and each following would go up $10, after five years there is “bump up” to 15% if general EPA goals are not realized / met.
To maintain competitiveness in for US manufacturing Larson suggested an equivalency fee for imports of goods from other countries.
As an offset for businesses and to “return” money to tax payers Larson suggested a reduction to payroll taxes.
Added in to the bill were deductions for R&D and what was termed “transition assistance”.
If you read between the lines of my purpose for mentioning this, I am using these latest figures in a future write up to help calculate out how a Carbon Tax would work, how much it should cost, what’s the high and the low that will get us to 100 percent renewable energy within the time that we need, without causing undue stress to the economy.