Democrat moves to revive carbon tax as option for upcoming EPA rules

Source: Jean Chemnick, E&E reporter • Posted: Thursday, May 22, 2014

One House Democrat yesterday floated draft legislation that would allow states to implement a carbon tax to comply with U.S. EPA’s forthcoming rule for existing power plant CO2.

Rep. John Delaney (D-Md.) proposed giving states the option of implementing a state-level excise tax on the greenhouse gas emissions from regulated existing generation as a means of satisfying the rule EPA will propose next month under Section 111(d) of the Clean Air Act. He is soliciting feedback on his draft.Little is known about the proposal currently being vetted by the White House’s Office of Management and Budget ahead of a June 2 rollout, but it is not expected to call for a cap or tax on emissions, or any other reference to policy proposals that have so far failed to gain traction on Capitol Hill. Instead, EPA is expected to propose emissions-reduction requirements and guidance for how states should craft plans to implement those standards.

The standards may be expressed either as total aggregate emissions states would be allowed to release or as limits at individual plants — a “rate-based” standard. EPA has given few details about what it will propose, including whether it will require reductions across the power system or whether it will be limited to upgrades on-site at plants.

In a statement accompanying the proposal, Delaney said he shares President Obama’s goal of limiting the emissions driving climate change. But he said a carbon tax would allow the market to decide how emissions would be curbed, allowing for maximum efficiency.

“To tackle a problem this big, we need to unleash the power of the market and encourage the innovation and drive of our inventors and entrepreneurs,” he said.