Could a Federal Carbon Tax Put Money in Your Pocket?

A carbon tax based on Alaska's Permanent Fund, where tax revenues are returned to residents, is the model for legislation proposed by Senators Boxer (D-CA) and Sanders (I-VT) in response to Pres. Obama's call for Congress to act on climate change.

2 minute read

February 19, 2013, 9:00 AM PST

By Irvin Dawid


Carolyn Lochhead writes that Sen. Barbara Boxer (D-CA), co-sponsor of last year's transportation reauthorization legislation known as MAP 21 and chair of the powerful Environment & Public Works Committee that handles transportation matters "is a marquee draw for an otherwise obscure bill by Sen. Bernie Sanders, a Vermont liberal and independent. Called "fee and dividend," the legislation is an unusual variant on a carbon tax. It would impose a fee on carbon emissions at their source, such as coal mines, raising the price of fossil fuel energy."

In fact, there are two (unnumbered) bills as described on Sen. Sanders Feb. 14 webpage, "A Climate Crisis":

  • The Climate Protection Act (PDF) establishes a carbon pollution fee, residential environmental rebate program and Pollution Reduction Trust Fund.
  • The Sustainable Energy Act (PDF) to eliminate certain fuel subsidies.

Lockheed draws the similarity to the Alaska program of rebating oil revenues on an annual basis.

But instead of giving the proceeds to the government, three-fifths of the money would be refunded to U.S. residents.

Such rebates could run into hundreds of dollars. The idea is modeled loosely on Alaska's "permanent fundthat distributes royalties from the state's oil and gas industry to every Alaskan resident".

In fact, according to the Alaska Dispatch, every resident received $872 from the fund last year.  

The oldest applicant was 107 years old, and the youngest was born "minutes before" the qualification deadline on December 31, 2011.

Whether these bills meet the "market-based solution to climate change" that President Obama called upon Congress to pass in the State of the Union address (as noted here) is questionable - but more clear is that a "cap & trade" bill modeled on the Waxman-Markey bill that cleared the House but not the Democrat-controlled Senate in 2009 has little likelihood chance of passing.
The legislation appears similar to NASA scientist James Hansen's Carbon Tax And Dividend approach.  He had no kind words for California's cap & trade approach as noted here in December when he was honored with a prestigious climate award in San Francisco.

However, President Obama also asked that the legislation be bi-partisan.  As KQED science reporter Jacob Fenston notes in his short summary of the Boxer-Sanders bill, as of "Thursday (Feb. 14), there were no Republicans in sight."

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