Waxman/Whitehouse Carbon Tax Draft

Bicameral Committee introduced draft legislation for a carbon tax.  Below are links to the four key documents and the text of the summary one pager of the draft legislation.

Representative Henry A. Waxman, Senator Sheldon Whitehouse, Representative Earl Blumenauer, and Senator Brian Schatz released draft carbon-pricing legislation and solicited feedback on it from stakeholders and the public.  The legislation would establish the polluter pays principle for dangerous carbon pollution, requiring large emitters to pay for the pollution they emit.

The “discussion draft” contains a new and straightforward approach to putting a price on carbon pollution.  The nation’s largest polluters would have to pay a fee for each ton of pollution they release.  The legislation assigns responsibility for the assessment and collection of the carbon fees based upon the expertise that has already been developed by EPA and the Treasury Department.  Under the discussion draft, EPA’s database of reported emissions would determine the amount of pollution subject to the fee.  The Treasury Department would be responsible for the collection and handling of the fees.


The legislators are specifically requesting feedback on the following questions:

1. What is the appropriate price per ton for polluters to pay?  The draft contains alternative prices of $15, $25, and $35 per ton for discussion purposes.
2. How much should the price per ton increase on an annual basis?  The draft contains a range of increases from 2% to 8% per year for discussion purposes.
3. What are the best ways to return the revenue to the American people?  The discussion draft proposes putting the revenue toward the following goals, and solicits comments on how to best accomplish each:  (1) mitigating energy costs for consumers, especially low-income consumers; (2) reducing the Federal deficit; (3) protecting jobs of workers at trade-vulnerable, energy intensive industries; (4) reducing the tax liability for individuals and businesses; and (5) investing in other activities to reduce carbon pollution and its effects.
4. How should the carbon fee program interact with state programs that address carbon pollution?

Comments can be submitted by email to cutcarbon@mail.house.gov, with responses being accepted up to April 12, 2013.

1. One Pager: "Tackling Climate Change and Raising Revenue for the American People, Carbon Pollution Fee Discussion Draft" (March 12, 2013).
2. Section-by-Section: "Discussion Draft: Fee for Emissions of Carbon Pollution" (March 12, 2013).
3. Backgrounder: "Carbon Pollution Fees: A New Workable Approach" (March 12, 2013).
4. Bill Text: Discussion Draft of Carbon Pollution Fee (March 12, 2013).

Below please find the text of the one-pager summary:

Tackling Climate Change and Raising Revenue for the American People

Carbon Pollution Fee Discussion Draft

Carbon pollution from human activity is driving climate change, which is harming our economy, health, and environment. The United States is the second-largest source of annual carbon pollution and has contributed over one-quarter of the cumulative global carbon pollution from human activity. Scientists warn that we must act now to reduce carbon pollution to avoid potentially catastrophic consequences.

The carbon pollution fee program outlined in this discussion draft released by Congressman Waxman (D-CA), Senator Whitehouse (D-RI), Congressman Blumenauer (D-OR), and Senator Schatz (D-HI) will generate substantial revenue while reducing carbon pollution. The draft abides by the following principles:

•          Polluting industries should be responsible for the harm they are causing to the American people.

•          All revenue generated by the carbon pollution fee should be returned to the American people.

•          Trade-vulnerable, energy-intensive industries should be protected.

Specifically, the discussion draft outlines a legislative framework that would:

•          Establish a carbon pollution fee that applies to all six categories of greenhouse gases.

•          Require large carbon pollution sources to pay the fee for carbon pollution permits based on the quantities of carbon pollution reported by the sources under the EPA’s Greenhouse Gas Reporting Rule.

•          Create a program to be jointly administered by the Department of the Treasury and EPA. EPA would implement and enforce emissions reporting under EPA’s Greenhouse Gas Reporting Rule, and Treasury would assess, collect, and enforce the fee requirements at the point where carbon pollution is emitted or passed on to consumers, depending on the type of source.

This approach would:

•          Drive significant carbon pollution reductions.

•          Generate substantial revenue to be returned to the American people.

•          Provide broad coverage of greenhouse gas emissions, while minimizing compliance and administrative burdens and utilizing each agency’s area of expertise.

Comments on any aspect of the discussion draft are welcome, and the lawmakers have identified the following key questions for feedback:

1.      What is the appropriate price per ton for polluters to pay? The draft contains alternative prices of $15, $25, and $35 per ton for discussion purposes.

2.      How much should the price per ton increase on an annual basis? The draft contains a range of increases from 2% to 8% per year for discussion purposes.

3.      What are the best ways to return the revenue to the American people? The discussion draft proposes putting the revenue toward the following goals, and solicits comments on how to best accomplish each: (1) mitigating energy costs for consumers, especially low-income consumers; (2) reduce the federal deficit; (3) protect the jobs of workers at trade-vulnerable, energy intensive industries; (4) reduce the tax liability for individuals and businesses; and (5) invest in other activities to reduce carbon pollution and its impacts.

4.      How should the carbon fee program interact with state programs that address carbon pollution?