As we get closer and closer to the fiscal cliff and our elected officials begin to contemplate the tax and spending reforms that will probably come up in the 113th congress, there is renewed hope that a significant environmental initiative may finally be part of the conversation. Many of you may remember the tragic ending that befell cap and trade, which attempted to create a new market to control the emission of carbon dioxide and other greenhouse gasses. Its death earned it a place amongst the ghosts of legislation past.
The pending reforms and necessary legislation have opened the door for a modest tax, perhaps $20 per ton, on carbon. Even the conservative proposals could generate in the neighborhood of $150 billion a year, which could then be applied towards keeping the payroll tax cuts, investing in green energy, deficit or debt reduction, or really anything.
It is still too early to say what a final legislative proposal will look like, but there at least seems to be some bipartisan interest. This represents at least some morsel of hope that this bill may have enough traction to become law. The next few months will be critical.
While we hope to see additional investments in alternative energy, taxing carbon emissions is a step towards disincentivizing its use and giving greener energy forms a chance to better compete.
While our values, encouraging the protection of the earth are highly important, we will need to make sure the tax is structured progressively and does not place an undue burden on low-income families. Simple as it may sound, the structure of this tax will be key and could have profound implications on environmental and social policy.
Photo Courtesy of Grist.