Could EPA's New Greenhouse Gas Rules Open The Door To A State-based Carbon Tax?

Jun 2 2014, 5:00pm CDT | by

EPA’s proposed tough new standards for power-plant emissions of greenhouse gasses opens the door to new state or regional cap-and-trade systems to limit carbon discharges. It is less clear whether it would go the next step and permit states to impose their own carbon tax.

The proposed EPA rules, which Brookings senior fellow Barry Rabe describes as “climate federalism,” seem to acknowledge the demise—at least for now—of a single federal solution to the climate problem. Instead, it grants states broad, but not unlimited, authority to come up with their own ways to reduce emissions.

Such a state-based approach recognizes reality: States and cities are already moving on their own in the absence of federal legislation. Operators of power plants may be more willing to work with their states than with the feds. And there simply is no possibility that Congress will enact any climate change measures in the current political environment.

The proposed regs, which still must go through what surely will be a contentious comment period, will require power plants to cut 2005-level carbon-dioxide emissions by as much as 30 percent by 2030. States would have to meet those explicit targets but have the flexibility to determine how facilities get there.

They could use more efficient technologies to produce electricity, shift to fuels that produce less CO2, invest in renewable energy such as wind or solar, or join a cap-and-trade system.  New England already operates an interstate model and California has developed its own version.

The EPA proposal opens the door to an expansion of state or regionally-based cap-and-trade. But nowhere in the 645-page proposal is the dreaded “t” word uttered.  A carbon tax is not excluded. It is simply not mentioned.  That’s too bad.

If you’re interested in learning more about carbon taxes, here are some good resources:  In a TaxVox blog in April, Adele Morris, policy director of climate and energy economics at Brookings, described how a state-based carbon tax might work. And for more detail on state-based market approaches, take a look at this paper by Adele and four co-authors from Stanford.

As my Tax Policy Center colleagues Donald Marron and Eric Toder discuss in a new paper for the American Economic Review, designing a workable carbon tax is not simple, and requires a number of difficult policy choices. And last year, Donald and Eric looked at how a carbon tax could be used to finance a cut in the corporate tax.

EPA is trying to marry tough, explicit goals for reducing emissions with a framework that gives states broad flexibility to get there. As the proposal grinds through the regulatory process, we’ll see whether a state-based carbon tax ends up in the mix.

change, EPA

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Ebola crisis may result in more hunger: UNDP report
United Nations, Nov 25 (IANS) Wild price swings caused by the Ebola health crisis are making it more difficult for households to feed themselves and make a stable living, according to a new UN report released Monday.
 
 
WHO reports plague outbreak in Madagascar
United Nations, Nov 25 (IANS) Outbreak of plague in Madagascar has killed 40 people, a UN spokesman said here Monday.
 
 
Russia to control annual oil production to help stabilise oil market
Moscow, Nov 25 (IANS) Russia attempts to stabilise global oil market by not exceeding its annual production of 525 million tons, Energy Minister Alexander Novak said Monday.
 
 
Indian American scientist develops path to brighter LCD displays
Washington, Nov 24 (IANS) Researchers led by an Indian-American have developed a polarising filter that can result in mobile device displays that last much longer on a single battery charge and cameras that can shoot in dim light.
 
 
 

Latest from the Network

Libyan warplanes strike Mitiga airport in Tripoli
Tripoli, Nov 25 (IANS) Libyan National Army warplanes Monday bombed Mitiga airport in Tripoli, causing all internal and international flights to suspend, according to military sources. The airstrikes on the crucial...
Read more on Politics Balla
 
WHO reports plague outbreak in Madagascar
United Nations, Nov 25 (IANS) Outbreak of plague in Madagascar has killed 40 people, a UN spokesman said here Monday. "Cases have been reported in 16 districts of seven regions, including in the capital, Antananarivo...
Read more on Business Balla
 
Russia to control annual oil production to help stabilise oil market
Moscow, Nov 25 (IANS) Russia attempts to stabilise global oil market by not exceeding its annual production of 525 million tons, Energy Minister Alexander Novak said Monday. "This is what we can do to stabilise the...
Read more on Business Balla
 
Katie Holmes reveals her Christmas fear
Katie Holmes wants to buy the right Christmas presents for her daughter because she doesn't want her moaning ''years and years'' down the line. The 35-year-old actress has revealed her daughter Suri Cruise, eight, has...
Read more on Celebrity Balla
 
Bob Geldof urges people to re-buy his Band Aid single
London, Nov 25 (IANS) Irish rocker Bob Geldof has urged people to delete and re-download the Band Aid 30 single "Do They Know It's Christmas Time?" as he is concerned that its prices won't raise much money for the...
Read more on Celebrity Balla
 
Apple Store Black Friday 2014 Sale uncovered
We reported earlier that Apple has announced a huge charity promotion to fight AIDS. Apple will donate a portion of the sales the company makes on the Apple Store Black Friday and Apple Store Cyber Monday sale to the...
Read more on Apple Balla
 
Katy Perry says Australian paparazzo has a 'tiny penis'
Katy Perry has accused Australian paparazzo Jamie Fawcett of having a ''tiny penis''. The 'Roar' hitmaker has been outspoken in her disapproval of photographers while touring in Australia and has singled out Fawcett for...
Read more on Celebrity Balla
 
Sting to star in Broadway production
Sting is to star in his own Broadway show. The singer, who wrote the music and lyrics of the show, entitled 'The Last Ship', has confirmed he will soon assume the lead role, which is currently being played by Jimmy Nail...
Read more on Celebrity Balla
 
Benedict Cumberbatch admires Sophie Hunter's attitude
Benedict Cumberbatch loves Sophie Hunter because she's so accepting of his fame. The 38-year-old 'Imitation Game' star admits it's tough to retain a sense of normality given his huge fan base, but insists his soon-to-be...
Read more on Celebrity Balla
 
13 killed in Baghdad bomb attacks
Baghdad, Nov 25 (IANS) At least 13 people were killed and 40 others wounded in two bomb attacks in the Iraqi capital of Baghdad Monday evening, a police source said. A car bomb went off near a parking garage in Shaab...
Read more on Politics Balla