By Carla Sands
April 3, 2024
These days, it's worth acknowledging common sense, especially in Washington, D.C. The House of Representatives recently passed a notable resolution, known as the “Sense of Congress,” that opposes carbon tax proposals that “would damage the economy of the United States damage”. Although the resolution passed with 212 Republican votes and just 10 Democratic votes, it represents a key understanding that should be self-evident to all lawmakers: A carbon tax intentionally increases energy costs, which has devastating effects on the entire economy.
Unfortunately, despite this recent positive development in the House of Representatives, a carbon tax and its partners' initiatives, including carbon accounting measures and carbon tariffs, are regularly proposed as bipartisan solutions in ongoing climate debates. Americans should be wary of these harmful proposals, even if they are framed as bipartisan, because they represent a capitulation to a radical, anti-energy agenda.
Although a carbon tax is often presented as a bipartisan, “free market” solution, it fits best with the progressive left’s other so-called green policies. It follows the same pattern as other anti-American energy policies, attempting to distort market forces in favor of an energy mix determined by Washington. This would increase costs for the average American and reduce quality of life while failing to achieve promised environmental results.
Those on the right who support the idea of a carbon tax often argue that it would be a net improvement if it replaced other taxes or regulations. You are naive if you believe that such a compromise is realistic. Furthermore, a regressive consumption tax that hurts American productivity should itself be rejected as a “less bad” solution.
Fundamentally, policies that raise energy costs increase costs throughout the economy and hit low- and fixed-income Americans the hardest. Fossil fuels provide low-cost, baseload electricity that is essential to our quality of life, from growing food to powering hospitals to heating homes. Anti-energy policies have been central to the whopping 18.2% rise in prices over the last three years. Today, gasoline and food prices continue to rise by 45% and 21%, respectively. Despite the trillions being spent on expanding renewable energy, fossil fuels account for nearly 80% of America's energy consumption, while wind and solar power only account for about 4%. A carbon tax would increase the burden that American families and businesses already bear.
Furthermore, if there is a call for a domestic carbon tax, a campaign for a carbon tariff or a carbon border adjustment mechanism (CBAM) will certainly follow. That's because Americans rightly don't want to face a competitiveness-sapping carbon tax while our industries are outsourced overseas. The European Union is already working to introduce a CBAM to address its own economically destructive carbon pricing system, which is leaving businesses and families drowning in high energy costs and driving industry out of business.
Some have argued that the US could take a different path and reach a bipartisan compromise in the form of carbon tariffs without a domestic carbon tax. But Americans also need to be careful about raising carbon tariffs as a first rather than a second resort. This recent vote has shown that the concept of a carbon tax has lost much of its appeal, particularly on the right, making the idea of imposing a standalone carbon tariff more attractive. Proponents argue that a carbon tariff is a way to punish high-emitting emitters like China and level the playing field for American workers. However, this is just another suggestion that has nothing to do with reality. Carbon tariffs, like carbon taxes, are initially a bad idea because they increase costs while aligning our trade policy with radical climate goals. The idea is made worse by the fact that carbon tariffs cannot be imposed without a domestic carbon price and are the gateway to a carbon tax.
Either carbon taxes are introduced as a precursor to a carbon tariff, or a carbon tariff is introduced as a precursor to a carbon tax. In any case, American producers and consumers will suffer – not high-carbon countries like China, which would certainly benefit from the West's climate-related economic capitulation.
Tellingly, these costly measures begin with arbitrary pricing of CO2 and near-impossible provisions to account for its release, both of which massively expand the bureaucratic state. In the US alone, the Obama administration initially put the social cost of carbon at $43 per ton, the Trump administration at $7 per ton, and the Biden administration at a whopping $190 per ton. At the same time, we are seeing increasing efforts to account for carbon emissions across the economy, an extremely costly and virtually impossible task.
A key, less discussed measure is the PROVE IT Act, a bipartisan bill recently passed by the Senate Environment and Public Works Committee that uses product-level average emissions intensity as a carbon accounting method. It is clear that carbon accounting is the first step toward taxes and tariffs that would destroy the American economy. The committee even rejected an amendment from ranking member Sen. Shelley Capito (R-WV) that would have prevented the data from being used to impose carbon taxes and tariffs. And although the amendment was defeated within the party, the bill moved forward with bipartisan support.
All Americans must be wary of this kind of posturing, which opens the door to bureaucratic expansion and pushes us toward a carbon tax structure. It is time for both parties to refuse to punish the American energy that underlies our national security, our economic prosperity and our daily lives. Let's have more common sense in Washington. The American people deserve it.
Carla Sands is the former US Ambassador to the Kingdom of Denmark. She is currently vice chair of the Center for Energy & Environment at the America First Policy Institute.
This article was originally published by RealClearEnergy and made available via RealClearWire.
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