What to do with the money raised from a carbon tax looms as the biggest sticking point to the policy as it slowly emerges from political purgatory in Washington.
The big picture: I know, we're talking about a fantasy here because Republicans controlling most of Washington right now, including President Trump, categorically oppose carbon taxes.
But the policy is slowly gaining support in pockets across the political spectrum, which could pick up momentum after the 2020 elections. So let's suspend our disbelief and look at this tussle over the cash, which is central to everything.
Driving the news: After a decade of stasis, some lawmakers, think tanks and advocacy groups are beginning to push policies with various prices per ton of carbon dioxide emissions, as well as different uses for the money.
- One proposal pushed by oil companies and former GOP politicians that starts at $40 a ton of carbon dioxide emitted would raise $200 billion a year. A $20 per ton tax would raise more than a trillion dollars over about a decade.
- Putting aside conservative opposition to creating any new taxes, divisions are emerging over how to use carbon-tax revenue, like sending it back to consumers or investing in renewable energy.
- This tension gets at the heart of the challenge of addressing climate change: Make fossil fuels more expensive without hitting pocketbooks too much, and/or make cleaner energy technologies cheaper.
Here's a glimpse of the money options — and the fault lines....
1. Among the public, the most popular use of money raised from a carbon tax is to restore the environment, according to a recent poll by the University of Chicago's Energy Policy Institute and the AP–NORC Center for Public Affairs Research.
2. The most high-profile proposal at the moment, and the one that has the most support among economists, is to rebate most or all of the money back to consumers in dividend checks.
3. Former GOP Rep. Carlos Curbelo of Florida, who just lost a re-election, introduced carbon tax legislation last summer that would have repealed the federal gasoline tax and used the money mainly to fund infrastructure.
- Rep. Francis Rooney (R.-Fla.), who is the only sitting Republican supporting recently introduced carbon tax legislation rebating the money, prefers using it to either reduce the payroll tax or replace the gas tax.
4. Some conservatives say a carbon tax should be used to address fiscal woes, like looming insolvent funds.
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