This post was originally published on Legal Planet. Reprinted with permission.
Production and combustion of fossil fuels impose enormous costs on society, which the industry doesn't pay for. I want to talk about some options for using the tax system to change that.
One option, a tax on carbon dioxide emissions, gets the most attention but seems politically impossible. The closest we've ever come to a carbon tax is a limited fee on methane emissions under the new Inflation Reduction Act (IRA) law. A more promising alternative might be a clean-up tax on the fossil fuel industry.
If a carbon tax were politically feasible, there would be a lot to be said in its favor. Economists like carbon taxes better than regulations, and environmental justice advocates like them better than cap and trade. A carbon tax could cover the economy without the need for scores of regulations tailored to each industry. It wouldn't require placing bets on what zero-carbon technologies will win out. It would provide an incentive for cutting carbon emissions, with the byproduct of cutting air pollution everywhere. Unlike emission trading systems, they don't require designing and operating new markets. It could be designed to avoid regressive impacts on the poor.
The problem is that a carbon tax seems out of the question politically. Americans just don't buy the idea. Promises to return the money to the public ("tax and dividend") or use it to offset other taxes don't seem to be effective in changing people's minds. Maybe people just don't trust those promises. It's possible this anti-tax reflex will abate, but politicians don't seem to think that's likely.
If we can't make the fossil fuel industry pay for all its harm to the climate, maybe we can at least make it pay for some of the other harm it does to the environment. Just as chemical production led to the creation of scores of hazardous waste sites, fossil fuel production has left its own bitter legacy. Oil and gas production has left thousands of uncapped, leaking wells. Abandoned coal mines leach pollutants into surface and groundwater while also leaking methane into the air. State law and federal bonding requirements have not proved equal to the task of clean up.
The coal mine part of the problem was addressed in part by a 1977 law, which imposes a fee on coal production to help pay for clean-ups. But the tax is hopelessly inadequate, merely pennies per ton of coal. It produces only about $700 million per year. Yet Congress had to appropriate $11 billion for cleaning up old mines in the infrastructure bill, and there's no reason to think that will be enough to solve the problem. The industry should be paying a much higher share of those costs.
There's also a tax on oil to pay for environmental harm — but it's limited to oil spills. The IRA adds a small tax on oil to help support Superfund cleanups. Neither does anything to pay for abandoned wells.
The infrastructure bill allocated $4 billion to pay for this problem. That won't be enough, not by an order of magnitude. And besides, why should taxpayers, rather than the industry, cover the cost? To do this, we would need a new tax on oil and gas production to pay for capping abandoned wells. Considering the amount of money they're making right now, this seems only fair.
Yes, I realize that Sen. Joe Manchin won't vote for any of this, making it a nonstarter this year. And the GOP is likely to be able to block such a bill until the 2024 elections. But depending on how things go in 2024, it might be well worth considering.
Showing 2,837 results
Daniel Farber | August 19, 2022
Production and combustion of fossil fuels impose enormous costs on society, which the industry doesn't pay for. I want to talk about some options for using the tax system to change that.
Alexandra Rogan, James Goodwin | August 18, 2022
The Inflation Reduction Act (IRA) will subsidize our nation's clean energy revolution and have a positive impact on climate-driven economics, as noted in Part I of this series. That said, the IRA isn't flawless. Notably, it includes several subsidies for fossil fuels, which will be counterproductive as our nation works toward its climate goals. Worse still, not all "carrots" for clean energy technologies are good, and the IRA includes a potentially bad one. Specifically, the IRA risks subsidizing the clean energy transition through perpetuating environmental injustice in how we obtain and use energy to fuel our economy.
Alexandra Rogan, James Goodwin | August 18, 2022
With the signature of President Joe Biden, the Inflation Reduction Act (IRA) now marks the most significant climate policy action the United States has ever taken. The defining feature of this law is that it seeks to wring carbon dioxide emissions out of the U.S. economy by relying heavily on policy "carrots," like subsidies, instead of policy "sticks," such as regulating the fossil fuel industry or attempting to capture the external costs of greenhouse gas emissions through carbon pricing.
James Goodwin | August 10, 2022
After more than 50 years, the Clean Air Act is due for an upgrade to account for changing circumstances. We can now recognize how the law is insufficiently attentive to the realities of structural racism and systemic disparities in environmental protections. Polluters have exacerbated these problems by weaponizing uncertainty to oppose stronger protections for those who need them most. In speaking to both challenges, the Public Health Air Quality Act would help ensure that the Clean Air Act is well positioned to continue serving the American people for the next 50 years.
Daniel Farber | August 8, 2022
What wetlands and waterbodies does the Clean Water Act protect? Congress failed to provide a clear answer when it passed the statute, and the issue has been a bone of contention ever since. The Biden administration is in the process of issuing a new regulation on the subject. Normally, you'd expect the Supreme Court to wait to jump in until then. Instead, the Court reached out to grab Sackett v. EPA, where landowners take a really extreme position on the subject. Not a good sign.
Sophie Loeb | August 4, 2022
On July 27, I had the privilege of testifying at the North Carolina Utilities Commission (NCUC) public hearing regarding the Duke Energy Carbon Plan. The Asheville hearing was one of six forums designated for public witness testimony on the proposed decarbonization plan. In 2019, North Carolina joined 34 other states investing in solar, wind, and other renewable resources when it passed its Clean Energy Power Plan, and, in 2021, when it passed House Bill 951, which commits to a 70 percent carbon reduction by 2030 and carbon neutrality by 2050. When Duke Energy, a major corporation with outsized influence over the state’s decarbonization plan, submitted its proposal to meet those goals, it failed to account for affordability and equity.
Hannah Klaus | August 3, 2022
Last week, the Center for Progressive Reform joined 90 organizations in expressing strong support for the Environmental Justice for All Act in a letter as the bill went before the House Committee on Natural Resources for markup. The coalition, led by Coming Clean, a collaborative of environmental health and environmental justice experts, and the Environmental Justice Health Alliance for Chemical Policy Reform, urged committee members to advance this important legislation to the House floor. The bill, introduced by Reps. Raúl M. Grijalva of Arizona and Donald McEachin of Virginia, is the most significant effort by the federal government to address generations of environmental racism.
James Goodwin | July 27, 2022
The Biden administration’s path forward on climate change -- as the widely deployed metaphor goes -- has become more difficult with the U.S. Supreme Court’s recent decision in West Virginia vs. Environmental Protection Agency (EPA). If the Biden administration is to successfully navigate that path -- and it must if we are to avert the worst consequences of the climate crisis -- the president will need to abandon the “compass” that his predecessors have relied on for decades to guide their policy agenda: Executive Order 12866: Regulatory Planning and Review.
Thomas McGarity, Wendy Wagner | July 25, 2022
Law professors dream of the day when the U.S. Supreme Court will rely on one of their publications for a proposition that is crucial to the outcome of an important case. What better validation of all the blood, sweat, and tears that were poured into the publication? What an existential high to know that they have finally arrived at the pinnacle. We experienced none of those emotions when reading Chief Justice John Roberts' opinion in West Virginia v. EPA. The citations to our work were both minor and innocuous, so that fact helps allay any sense of accomplishment. But equally significant, the Court's analysis bears little relationship to our own understanding of Section 111(a) of the Clean Air Act.