Press Release

A Problematic Feature in Conservatives' Carbon Tax Proposal

Mar 28, 2017

WASHINGTON—In a new blog post, former Resources for the Future (RFF) Senior Fellow Joel Darmstadter applauds, but also questions a key part of, a carbon tax proposal recently offered by a group of notable Republican conservatives heretofore largely missing from meaningful public debate about climate change. Convinced of the urgency of addressing the global warming threat, the group of economists and former cabinet secretaries calls for an initial, but steadily rising, tax corresponding to $40 per ton of carbon dioxide if emitted “downstream” in the economy. Such an approach, along with features to ensure fiscal neutrality and fairness, have been advocated by others. What is unique in the group’s blueprint, released under the auspices of the Climate Leadership Council (CLC), is that the tax be levied “upstream,” according to the carbon content of fossil fuels extracted at an oil or gas well or at a coal mine. The case of coal points up a particular dilemma under such an arrangement: a carbon tax on mined coal would translate to around $90 per ton of coal—a large multiple of the approximately $30 per ton price at which coal is selling in the marketplace. Darmstadter, citing earlier RFF research, found such upstream taxation of carbon as unrealistic. For that reason and the fact—perhaps overlooked by the CLC group—that a disincentive to mine coal would necessarily stifle ongoing efforts to capture and sequester coal-based carbon dioxide emissions at power plants prompts Darmstadter to observe that “an otherwise telling initiative on the global warming challenge needs another look.”

Read the new blog post—Conservatives' Embrace of a Carbon Tax Requires Revisiting the Coal Impact.

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Resources for the Future (RFF) is an independent, nonpartisan organization based in Washington, DC, that conducts rigorous economic research and analysis to improve environmental and natural resource policy.