Former Secretary of State James Baker in 2008.

Miller Center/Flickr (CC BY 2.0)

A group of prominent Republicans just launched a longshot bid for a carbon tax

Originally published by E&E News

Former Secretary of State James Baker led a group of senior Republican statesmen today in rolling out a plan for using a carbon tax to reduce greenhouse gas emissions.

The four-pillar proposal calls for a revenue-neutral carbon tax starting at $40 per ton.

Ahead of a White House meeting with Gary Cohn, the former Wall Street executive who is President Trump's economic adviser, Baker acknowledged in a Washington press briefing that his Climate Leadership Council faces an "uphill slog," despite what he framed as the proposal's populist appeal.

"You can't look at this as a tax, even though the word 'tax' is used," Baker said.

Dubbed the "Republican climate jailbreak strategy," the plan calls for taxes to be collected at the source — on oil at the refinery, for instance — then built into the prices for products made from that material. Revenue would be returned to taxpayers, amounting to about $2,000 annually for a family of four.

"Two-thirds of American households will receive more in carbon dividends than they will pay directly in carbon taxes," said Martin Feldstein, who served as chairman of President Reagan's Council of Economic Advisers.

Most people, he said, would be "net financial winners."

In addition to Baker and Feldstein, other council members are George Shultz, secretary of State under Reagan; Henry Paulson, President George W. Bush's Treasury secretary; and N. Gregory Mankiw, who chaired Bush's Council of Economic Advisers. The group also includes Thomas Stephenson, a partner at venture capital firm Sequoia Capital; Rob Walton, former chairman of the board at Wal-Mart Stores Inc.; and Ted Halstead, the council's founder.

You can't look at this as a tax, even though the word 'tax' is used.

James Baker

In exchange for the tax, much of U.S. EPA's regulatory authority over carbon dioxide emissions would be phased out, including the Obama administration's Clean Power Plan.

Natural Resources Defense Council President Rhea Suh faulted that part of the strategy, arguing that effective action on climate means building on the current scheme.

"Putting a price on carbon could be an important part of a comprehensive program," Suh said. "It can't do the job alone, though, and is not a replacement for carbon limits under our current laws."

Heritage Action for America also attacked the plan, alleging that it is a policy solution crafted by and made for "cultural elites."

"Replacing Obama's destructive regulatory regime with a destructive taxation regime will not make American companies more competitive or bring jobs back to abandoned communities," CEO Michael Needham said.

"These so-called party elders might want to meet with former Secretary [of State Hillary] Clinton to discuss this idea," he added.

Chris Warren of the American Energy Alliance pointed out that Trump has vowed to undo Obama's climate agenda, "so there's no need to do a 'regulatory swap' deal."

"That's a bad deal, and President Trump recognizes a bad deal when he sees one," Warren said.

On Capitol Hill, the plan was endorsed by Sen. Sheldon Whitehouse (D-R.I.), a climate action advocate who has proposed his own revenue-neutral carbon tax legislation with Sen. Brian Schatz (D-Hawaii).

"This impressive group of Republican Cabinet members and presidential economic advisers shows how bipartisan progress on climate change is possible outside the electoral shadow of the fossil fuel industry's political bullying," Whitehouse said.

Citizens for Responsible Energy Solutions, a group that focuses on engaging Republicans on climate policy, welcomed the plan. CRES said it aligns with voter support for clean energy.

Putting the plan in motion would require congressional action, Baker said, but the focus starts with Trump.

If implemented, the proposed tax would likely reduce U.S. greenhouse gas emissions 28 percent by 2025, according to an analysis by two leading scholars on energy-related policy.

The proposal's co-authors are David Bailey, who spent 35 years in the fossil fuel industry and worked on Exxon Mobil Corp.'s climate policy, and David Bookbinder, who has litigated cases under all of the major environmental statutes, including, as the Sierra Club's chief climate counsel, the Supreme Court's landmark Massachusetts v. EPA decision.

Mankiw characterized the plan as a "panacea."

The government will continue to "lurch back and forth" between so-called command-and-control standards on carbon emissions and the deregulatory approach favored by conservatives without such a policy, Mankiw argued, which "makes long-term planning all the more difficult."

Reprinted from Greenwire with permission from E&E News. Copyright 2017. E&E provides essential news for energy and environment professionals at www.eenews.net