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Taxing U.S. carbon emissions with an escalating levy that starts as high as $73-per-ton would have a pretty small effect on carbon emissions from the transportation sector, a Rhodium Group analysis finds.

Why it matters: Transportation has overtaken electricity as the largest source of U.S. emissions. Wringing CO2 out of transportation is hard, in contrast to progress underway in electricity.

Screenshot of chart in the Rhodium Group report, "Energy and Environmental Implications of a Carbon Tax in the United States"

The details: The report shows that a $50-per-ton tax that climbs 2% annually would cut economy-wide CO2 emissions by 39% to 47% below 2005 levels by 2030. But the vast bulk of this occurs in power.

  • The report was among several released yesterday in conjunction with Columbia University's Center on Global Energy Policy.

Between the lines: It provides several reasons why transportation emissions are stubborn...

  • The relative lack of easy and low-carbon substitute fuels.
  • Cost has a limited effect on driving levels.
  • Fuel price increases from the taxes are within historic variability.
  • The vehicle fleet turns over slowly. People stick with what they've bought because purchase price far exceeds annual operating costs.
  • That's different from power, where generators compete on fuel costs.

The bottom line: "These results suggest that if achieving deep economy-wide GHG reductions is one of the policy goals for a carbon tax, then either a much higher carbon tax rate or policy interventions targeting transportation demand, vehicle technology, and decarbonization of fuels may be necessary."

Yes, but: Noah Kaufman, an economist with the Columbia group, says the "common perception" that CO2 taxes will do little to change drivers' behavior is questionable.

  • He said models assume that's the case because big gas price swings haven't historically had a big effect on driving.
"What you’ve seen out in real-world carbon pricing programs is something pretty different. If you look in British Columbia, the evidence suggests consumers are responding quite a bit more strongly than expected. ... The number you see from studies in BC and in Sweden, drivers are about three times more responsive to price changes when caused by carbon tax than by day-to-day price change."
— Kaufman

Stay tuned: Kaufman said he's soon releasing a short paper on vehicle emissions and carbon pricing.

Go deeper

Kevin McCarthy's rude awakening

House Minority Leader Kevin McCarthy. Photo: Mark Wilson/Getty Images

Kevin McCarthy is learning you can get torched when you try to make everyone happy, especially after an insurrection.

Why it matters: The House Republican leader had been hoping to use this year to build toward taking the majority in 2022, but his efforts to bridge intra-party divisiveness over the Capitol siege have him taking heat from every direction, eroding his stature both with the public and within his party.

The next big political war: redistricting

Illustration: Aïda Amer/Axios

Democrats are preparing a mix of tech and legal strategies to combat expected gerrymandering by Republicans, who are planning to go on legal offense themselves.

Why it matters: Democrats failed to regain a single state legislature on Election Day, while Republicans upped their control to 30 states' Houses and Senates. In the majority of states, legislatures draw new congressional district lines, which can boost a party's candidates for the next decade.

36 mins ago - Politics & Policy

Vaccinations, relief timing dominate Sweet 16 call

Sen. Joe Manchin (D-W.V.) speaks during a news conference in December with a group of bipartisan lawmakers. Photo: Caroline Brehman/CQ-Roll Call, Inc via Getty Images

Vaccine distribution, pandemic data and a cross-party comity dominated today's virtual meeting between White House officials and a bipartisan group of 16 senators, Senator Angus King told Axios.

Why it matters: Given Democrats' razor-thin majority in both chambers of Congress, President Biden will have to rely heavily on this group of centrist lawmakers — dubbed the "Sweet 16" — to pass any substantial legislation.