Energy experts discuss the future of carbon tax policy design and revenue use alternatives

January 31, 2019


Washington, D.C.: Two versions of a carbon tax failed on the ballot in Washington State, but would a carbon tax have more public support with a different plan for using carbon tax revenues?’s (OEP) expert dialogue revealed a partial consensus among commenters that a carbon fee and dividend—in which tax revenues would be refunded to tax payers—would be the carbon pricing policy with the greatest likelihood to pass on the federal level.

“The public will take carbon taxes seriously when they are not used to financially enrich politically connected groups,” said Charles Forsberg, Executive Director for the Nuclear Fuel Cycle Project at the Massachusetts Institute of Technology, and OEP expert. “America is way too cynical for any other option than a carbon tax with full rebate to the public to work.”

A carbon fee and dividend bill—The Energy Innovation and Carbon Dividend Act—was introduced in the House of Representatives in December 2018 and reintroduced on January 24, 2019, by Rep. Ted Deutch (D-Fl). Time will tell whether the bill will pass. A carbon fee and dividend differs from the 2018 Washington State initiative, which would have used revenuesprimarily to fund investments in clean energy and healthy forests, and the 2016 initiative, which would have used revenues to give tax relief to low-income families.

Members of OEP’s vetted expert community discussed the political palpability and viability of carbon fee and dividend, including whether a border adjustment would prevent the carbon fee from putting the United States at a comparative disadvantage globally.

OEP experts made the following points about potentially successful revenue use options and reasons why a carbon tax did not pass in Washington State:

  • Distribute tax revenues to the public in a dividend.
  • Use the tax revenue to fund infrastructure and replace the gasoline tax.
  • Return some of the revenue to the public in a partial rebate and use the rest to fund sustainable infrastructure and grid modernization and to assist coal communities.
  • Focus instead on regulatory reform that removes incentives for utilities to build more and sell more, now that renewable energy costs have gone down. Also focus on energy efficiency and financing.
  • Support a gasoline and diesel tax increase instead of a carbon tax; public support is lacking for climate policy generally.
  • Initiatives in Washington State would have passed if voter behavior was not influenced
    by opposition ads by the fossil fuel industry.

With the Energy Innovation and Carbon Dividend Act in Congress, comments from this OEP online discussion can serve to inform journalists, legislators, and citizens regarding attitudes and perspectives within the energy community on carbon tax policy design. The entire discussion is available on the OEP website. OEP encourages a broad discussion and does not have or endorse any specific points of views or agendas.



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