Additional Essay and Evidence on Carbon Pricing/Taxes
Bill Synopsis (lines 1-13)
This proposal imposes a $75-per-metric-ton federal carbon tax on every corporation emitting more than 10 t CO₂ annually. “Corporation” is defined broadly to cover any legally recognized business entity. The EPA (emissions monitoring) and the IRS (tax collection) share enforcement. All revenue flows to the Department of Energy to (i) subsidize new renewable-energy projects and (ii) upgrade the national grid for renewable integration. The tax takes effect 1 Jan 2026; statutes that conflict are repealed.
Targeted Advantages
| # | Specific strength | Why it matters | Evidence |
|---|---|---|---|
| 1. Aligns with international guidance | The IMF calls a $75 / t carbon price by 2030 the level needed to keep warming “well below 2 °C.” Starting at $75 in 2026 exceeds that benchmark and signals U.S. leadership. | (Axios) | |
| 2. Emission-cutting potency | Modeling by Brookings shows a $50 / t tax (rising) could cut U.S. emissions 26-47 % below 2005; a flat $75 rate would achieve deeper cuts faster. | (Brookings) | |
| 3. High, predictable price signal for investors | A single, transparent price simplifies corporate planning and encourages quicker fuel-switching compared with complex regulatory mandates. | (same evidence as #2) | |
| 4. Dedicated reinvestment in clean infrastructure | Earmarking all proceeds for DOE renewables and grid upgrades accelerates decarbonization of supply and demand simultaneously. | text of §3 | |
| 5. Revenue potential | Studies show a $49 / t tax could raise ≈ $2 T in a decade; at $75 the yield is proportionally larger, giving DOE sizable capital without new deficits. | (Center for Climate and Energy Solutions, Congressional Budget Office) | |
| 6. Administrative feasibility | Enforcement rests with agencies that already collect emissions data (EPA) and taxes (IRS), reducing start-up overhead. | text of §3 | |
| 7. Early implementation, but not immediate | A 2026 start gives firms ~18 months to audit emissions, install metering, and plan mitigation investments. | text of §4 |
Key Drawbacks & Risks
| # | Concern tied to bill text | Why it matters | Evidence |
|---|---|---|---|
| 1. Extremely low exemption threshold (10 t CO₂) | Many small and medium enterprises—restaurants, small manufacturers—cross 10 t and would face new compliance burdens. By contrast, the EU’s CBAM exempts importers below 50 t. | (Reuters) | |
| 2. No phase-in or annual ramp | Jumping straight to $75 could cause price shocks in carbon-intensive sectors (cement, steel) and rapid pass-through to consumers. Most federal proposals start at $15-$50 and rise gradually. | (Center for Climate and Energy Solutions) | |
| 3. Regressive consumer impacts | Corporations typically pass carbon costs to final goods; without a household dividend the tax is regressive, hitting lower-income families hardest. | (Brookings, ScienceDirect) | |
| 4. No carbon-border adjustment | Domestic producers pay the tax, but foreign competitors could undercut prices unless imports are similarly taxed—risking emissions leakage and job losses in trade-exposed industries. | economic literature; not addressed in bill | |
| 5. Limited revenue flexibility | Earmarking all receipts to DOE renewables leaves nothing for worker retraining, rural energy assistance, or deficit reduction—options other bills use to widen political support. | compare §3 with C2ES proposal menu (Citizens’ Climate Lobby) | |
| 6. Administrative capacity questions | EPA/IRS must develop accurate facility-level carbon accounting for every firm above 10 t, a scale far beyond current greenhouse-gas reporting (~25 000 t threshold today). | EPA GHGRP comparison; administrative studies (same threshold issue) | |
| 7. Legal & political vulnerability | A stand-alone tax may face reconciliation and Major Questions court challenges; tying rate to social cost of carbon (now under EPA review at $75–$190/t) could bolster or complicate justification. | (The Heritage Foundation) |
Bottom Line
The bill’s $75 flat carbon price and guaranteed reinvestment in renewables would make it one of the most aggressive U.S. climate policies ever proposed, capable of driving substantial emission cuts and clean-energy build-out quickly. However, the low coverage threshold, lack of household relief, absence of a phase-in or border adjustment, and narrow use of revenues create economic, equity, and competitiveness risks that could undermine both effectiveness and political durability. Addressing these design gaps—e.g., adding a dividend, staging the rate, setting a higher exemption floor, or pairing with a carbon-border adjustment—would strengthen the policy while preserving its strong climate ambition.