By Karen Savage

A new carbon tax bill proposed on Monday would create a moratorium on enforcement of Clean Air Act regulations, but would still allow lawsuits aimed at holding the fossil fuel industry liable for climate change-related damages.

The Market Choice Act, introduced by Rep. Carlos Curbelo (R-Fla.) and co-sponsored by Rep. Brian Fitzpatrick (R-Penn.), outlines emission reduction goals and proposes the establishment of a temporary performance-based moratorium on enforcing Clean Air Act regulations in exchange for meeting those goals. The bill also calls for a repeal of the federal gas and diesel taxes.

Unlike another plan that has drawn backing from the fossil fuel industry—the Baker-Schultz plan—Curbelo’s bill does not discuss any waiver of climate liability suits and fossil fuel companies could still be held accountable for climate-related damages.

Any carbon tax faces long odds of being passed by the current Congress. Last week, the House passed a resolution sponsored by House Majority Whip Steve Scalies (R-La.) condemning a carbon tax. Only six Republicans – including Curbelo – voted against the resolution. Forty-one conservative groups signed a letter supporting it.

Curbelo, whose south Florida constituents are grappling with the effects of climate change, acknowledged the bill will be quickly denounced by many, but said he hopes critics instead offer constructive criticism that will lead to future legislation.

“It [the bill] will spark an important debate about investing in our country’s infrastructure, the way we tax and what to do to protect the environment,” said Curbelo, adding that he believes that one day his bill or similar legislation will become law.

The plan starts with an initial tax of $24 per ton on carbon emissions and includes a 2 percent increase annually. The heads of the EPA and Treasury Department would meet every 2 years to determine if goals for the previous years have been met. A provision allows for higher increases if intermediate goals have not been reached.

Long-term goals of the bill are to reduce emissions from fossil fuel combustion and additional emissions from non-fossil fuel sources, relative to 2005 levels, by 27-32 percent by 2025 and by 30-40 percent by 2032. If the goals are met, the moratorium on enforcement of Clean Air Act regulations would expire in 2033.

The bill calls for 70 percent of the revenue to go to the Highway Trust Fund, which will replace revenue lost by the elimination of the federal gas tax. The Highway Trust Fund finances the bulk of the federal government’s spending for highways and mass transit.

Other proceeds would go to a state grant program for low-income households and to help fund projects dealing with chronic coastal flooding mitigation and adaptation.

Smaller amounts are slated to go toward emissions reduction research, reforestation, environmental incentives programs, mine cleanup, weatherization and conservation programs. An assistance fund for displaced energy workers would also be created.

Bob Perciasepe, president of the Center for Climate and Energy Solutions and former deputy administrator of the EPA, said the Market Choice Act offers Congress an excellent starting point for crafting a market-based solution.

“It demonstrates the potential fiscal benefits of a carbon price, protects low-income families, and offers a promising way to balance pricing and regulatory approaches to ensure strong climate benefits,” Perciasepe said.

Dr. Andrew Steer, president and chief executive of World Resources Institute, a global research agency, said the bill brings renewed hope for bipartisan cooperation on climate change.

“This bill reflects the growing understanding that we can address dangerous emissions and at the same time generate revenue that can be used to strengthen the nation,” said Steer, adding that climate impacts are increasing and do not distinguish between political parties.

The Columbia Center on Global Energy Policy Center, which last week released a series of carbon tax studies, conducted an independent analysis of the impacts of Curbelo’s bill and predicted it will lead to economy-wide net greenhouse gas emissions reductions. Those reductions, the studies say, would outpace the United States’ promised commitments to the Paris climate agreement.

The center’s analysis predicts that crude oil production will not be significantly affected and fuel prices will increase by less than 10 cents per gallon. Natural gas production is expected to initially increase slightly, then fall below current production by 2030. Coal production is expected to continue to fall.

Kate Gordon, a fellow at the Columbia Center and vice chair of climate and sustainable urbanization at the Paulson Institute, said a highlight of the plan is that it returns 10 percent of the proceeds to households who might end up paying more under the plan.

“It essentially offsets all of the higher energy prices to those households, so it makes them whole,” said Gordon, who added that it’s important to note that Curbelo’s plan doesn’t return all proceeds, as some plans have proposed, including Baker-Schultz.

Gordon said electricity prices under the plan are predicted go up about 8 percent, but the amount consumers pay will likely go down because of increased energy efficiency.

“Sometimes just looking at the cost is not that relevant when it comes to what most people pay attention to. Most people cannot tell you their kilowatt hour cost, but they can tell you how much their bill is,” she said, adding that most consumers will not see an increase in the amount they pay.

The proposal also includes the creation of a National Climate Commission that would “set goals for emissions reductions that reflect the latest scientific findings of what is needed to avoid serious human health and environmental consequences of a changing climate.”

Curbelo said his south Florida district is already facing many impacts from climate change: rising sea levels, chronic coastal flooding, threats to drinking water from saltwater intrusion in the Everglades and ocean acidification that damages coral reefs and threatens the livelihoods of fishermen and charter boat captains.

Gordon said increasingly severe climate impacts are prompting legislators like Curbelo to approach the need for climate solutions with a renewed urgency.

“I just think it’s an interesting moment where that physical impact piece is really bringing this issue to the fore, whether it’s wildfires, sea level rise, storms; it’s what people are starting to pay attention to across the aisle because it’s very local and very specific and very immediate,” Gordon said.

Curbelo implored his colleagues to work together to preserve the planet and to protect future generations.

“I remind my conservative colleagues who often decry our nation’s growing debt that saddling young Americans with a crushing environmental debt—meaning an unhealthy planet where life is less viable—is at least as immoral as leaving behind an unsustainable fiscal debt,” Curbelo said.

By Karen Savage

Oil and gas companies could be off the hook for climate change-related damages if a new carbon tax proposal makes its way through Congress.

The proposal is being spearheaded by Americans for Carbon Dividends, an industry-backed organization whose mission is to build support for the Baker-Shultz Carbon Dividends Plan, which proposes taxing carbon emitters and returning the proceeds to the American public. It also includes a waiver of the right to sue fossil fuel companies for climate change impacts and suggests rolling back most Environmental Protection Agency regulations on greenhouse gases.

Launched earlier this month, Americans For Climate Dividends is co-chaired by former Senators Trent Lott (R-Miss.) and John Breaux (D-La.), whose lobbying firm was hired to promote the campaign. Its public relations effort is being led by Hill+Knowlton, a firm that once spearheaded the communications campaign for Big Tobacco.

The group has succeeded in gaining support from politicians and policymakers from both parties and even garnered qualified support from some environmental organizations. The public relations effort has succeeded in placing several Op-Ed articles and some newspaper editorial boards have endorsed it.

The Baker-Schultz plan—named for its lead authors, former secretaries of state James A. Baker III and George P. Shultz—proposes the implementation of a gradually rising carbon tax, with 100 percent of the proceeds paid to Americans in a monthly dividend payment. For companies that import or export goods to countries without a carbon pricing system, a border adjustment would be specified. The plan starts the tax at $40 per metric ton, but does not specify how or by how much it will rise.

The plan also includes what it calls “regulatory simplification:” a rollback of carbon dioxide emissions regulations because the authors claim the program would reduce emissions more than all current and prior climate regulations.

And although U.S. taxpayers would benefit from monthly dividend payments, it would also mean none of the proceeds would help cities and states pay the already ballooning costs of climate mitigation and adaptation.

While the plan’s promoters are suggesting it’s a win for everyone, the relatively low level of taxation and support of the fossil fuel industry raises myriad questions.

“Most would say a carbon tax is a great idea if you can get it right and make it stick—it’s what we want, a price on carbon,” said Kert Davies, director of the Climate Investigations Center.  

“But who’s the client —who’s paying Hill+Knowlton—is it Exxon or is it one of the fossils?” he said, adding that the issue of litigation seems out of sync with the rest of the Baker-Schultz plan.

The liability waiver means municipalities would be unable to file climate liability suits against fossil fuel companies. Many of those suits are already in progress, led by some California communities, New York City and most recently, the state of Rhode Island, as cities and towns wrestle with how to pay for climate impacts that are already happening.

“Robust carbon taxes would also make possible an end to federal and state tort liability for emitters,” wrote Baker and Schultz, in the plan, which was unveiled last year by the Climate Leadership Council, a 501(c)(3) policy institute founded by author and policy entrepreneur Ted Halstead.

However, the initial $40 carbon tax is far from robust, according to studies on the true social cost of carbon. A recent study by University of Massachusetts researchers showed a carbon tax would have to reach $200 a ton to change consumer behavior and to keep low-income consumers from absorbing a disproportionately high amount of the costs.

One study presented to the Canadian government said a tax would have to reach $300 a ton in the coming decades for that country to meet its emissions reduction targets it made to the Paris Climate Agreement.

According to the Climate Leadership Council website, co-founders include an unlikely mix. Listed among others are oil giants Exxon, BP, Shell, and Total, corporate giants P & G, Johnson & Johnson, Pepsico, and Excelon, individuals Ben Bernanke, Michael Bloomberg and Christine Todd Whitman and the environmental organization The Nature Conservancy.

Halstead said the council has worked with both fossil fuel companies and environmental groups since its launch.

“We have decided consciously not to accept corporate money because we want to be the honest broker between all the sides in the debate,” said Halstead on a panel last year, referring to the Climate Leadership Council, which reported less than $50,000 in gross receipts in 2016, the last year in which IRS  information is available for the organization. But Halstead also leads the Americans for Carbon Dividends, a new advocacy organization that has accepted more than $1 million in corporate money.

In a recent press release, Americans for Carbon Dividends boasted it has “raised a seven-figure annual budget from a range of energy industry leaders, including Exelon, First Solar and American Wind Energy Association, among others.” Exelon and First Solar are also corporate co-founders of the Climate Leadership Council.

Americans for Climate Dividends was formed in March  as a registered 501(c)(4) organization, and isn’t required to reveal its donors. It’s unknown if the Climate Leadership Council’s other co-founders—oil giants, corporations and individuals—are funding the new group.

“We’re respecting the wishes of each individual donor—if they want to be associated with this publicly, of course we welcome that, but if they choose not to for whatever reason, we respect that as well,” said Richard Keil, managing director of Hill+Knowlton Strategies, which is leading communications for Americans for Climate Dividends.

Hill+Knowlton’s involvement with those advocating for the Baker-Schultz proposal has some wondering if the firm’s work on behalf of oil and gas companies in trying to eliminate climate liability suits is similar to its work for tobacco companies. Their attempts to block access to the courts by individuals seeking compensation from tobacco companies ultimately failed.

“To me that’s the crux of the issue—whether or not this is part of their strategy of getting these lawsuits to go away,” Davies said.

Keil, who is listed as communications director on the AFCD website, worked for Exxon prior to joining Hill+Knowlton. Exxon is a founding member of the Climate Leadership Council.  

David Bookbinder, chief counsel for the Niskanen Center, a libertarian think tank, and former senior policy advisor for the Climate Leadership Council, said eliminating climate liability suits is a big reason the industry supports the Baker-Schultz Plan.

Many communities are now facing a staggering cost to protect themselves from rising sea levels and other climate change-related impacts and are forced either to use litigation to force the fossil fuel industry to pay for damages, or raise taxes on their residents.

“The fossil fuel industry is not going to support a carbon tax unless they’re immunized from damages,” said Bookbinder, who warned that what’s good for fossil fuel companies may not be good for communities.

Bookbinder, who previously served as chief climate counsel for the Sierra Club, and is co-counsel representing three municipalities in Colorado suing Exxon and Suncor for climate change adaptation costs, said municipalities on the frontlines of climate change are especially vulnerable.

Communities, no longer able to sue, could end up paying twice: once as carbon emitters and again to pay to mitigate damages caused by sea level rise and other climate impacts.  

“They’re all going to have to pay the carbon tax, which is appropriate, but at the same point, they’re going to have to tax themselves to pay for the climate damages,” he said.

The plan doesn’t address who will pay for climate damages, and not everyone is convinced the Baker-Schultz plan will reduce carbon emissions or help the American public.

Peter Frumhoff, director of science and policy and chief climate scientist at the Union of Concerned Scientists, said the proposal is a place to start the discussion of climate policy and he supports a carbon tax on principle. But he also said municipalities should continue to seek damages for climate impacts and should not trade away the ability to file liability suits.

Frumhoff also said those lawsuits appear to be having a political impact.

“It’s striking that there’s language in here about liability relief and to my mind, among other things, that suggests that the lawsuits are important not only for seeking legitimate goals for municipalities to be compensated for the costs they’re incurring, but because they are clearly driving, at least in part, the motivation of at least some companies to come to the table and to seek a deal.”

Davies said he wonders if the plan’s main goal is to implement a carbon tax-dividend program or to eliminate liability suits.

“If the tobacco companies had been able to get a $10 a pack cigarette tax in exchange for no lawsuits, they probably would have taken that deal—and this is far short of that.”

Jennifer Dorroh contributed reporting to this story.