A group of prominent Republicans and business leaders, including former Treasury Secretaries Hank Paulson and James Baker, will meet with some of President Donald Trump’s top advisers at the White House Wednesday to push a plan to tax carbon dioxide in exchange for lifting a slew of environmental regulations.
“Unlike the current cumbersome regulatory approach, a levy on emissions would free companies to find the most efficient way to reduce their carbon footprint,” Baker and former Secretary of State George Shultz wrote in a Wall Street Journal opinion article posted online late Tuesday. “A sensibly priced, gradually rising tax would send a powerful market signal to businesses that want certainty when planning for the future.”
The proponents are set to formally announce their proposal Wednesday at the National Press Club, lending their stature to an approach for addressing climate change that mirrors an idea already advanced by Exxon Mobil Corp. The self-dubbed Climate Leadership Council pushing the framework says a carbon tax is necessary to respond to "mounting evidence of climate change" that is "growing too strong to ignore."
The plan faces strong political headwinds; both Trump and a majority of the House of Representatives have come out against a carbon tax in the past year. Trump also has pledged to do away with environmental regulations limiting emissions of carbon dioxide and other greenhouse gases that exacerbate climate change.
But the idea of a carbon tax, long favored by economists as the most straightforward way to address climate change, could gain traction as part of a broad tax overhaul on Capitol Hill.
The blueprint involves a $40 tax on every metric ton of carbon dioxide released by burning fossil fuels, with the price climbing over time. To avoid an undue burden on the poor from the higher energy bills that would result, the projected $200 billion to $300 billion in annual revenue would be redistributed to households in the form of quarterly checks from the Social Security Administration. Families of four would see an average annual payout of $2,000 under the plan.
The proposal also calls for border adjustments that would act to hike the costs of products imported from countries that do not put a price on carbon.
Former Republican presidential candidate Mitt Romney described the proposal in a tweet as a "thought-provoking plan from highly respected conservatives to both strengthen the economy and confront climate risks."
Paulson, who served as Treasury secretary under President George W. Bush, previously has advocated a carbon tax through his eponymous think tank, the Paulson Institute. Joining Paulson in the push is Baker, who served as secretary of state and Treasury secretary under two Republican administrations, as well as Shultz, Wal-Mart Stores Inc. founder Rob Walton and Sequoia Capital Operations LLC partner Thomas Stephenson, among others. Economic advisers to former presidents George W. Bush and Ronald Reagan also are involved in the effort.
The group envisions the carbon tax taking the place of an array of Obama-era environmental regulations that raise the cost of fossil fuels. The centerpiece of President Barack Obama’s climate agenda, the Clean Power Plan slashing emissions from electricity, would be immediately repealed, while others would be phased out over time. U.S. companies emitting carbon dioxide also could win liability protections under the deal.