Rejecting Calls for Carbon Taxes Is Common Sense

By Carla Sands

April 03, 2024

These days, good sense is worth recognizing, especially in Washington, D.C. The House of Representatives recently passed a noteworthy resolution, known as a “sense of Congress,” opposing carbon tax proposals as “detrimental to the United States economy.” Though the resolution passed with 212 Republican votes and just 10 Democratic votes, it represents a key understanding that should be common sense for all lawmakers: a carbon tax raises energy costs by design, with devastating effects economy-wide.

Unfortunately, despite this latest positive development in the House, a carbon tax, and its partner initiatives, including carbon accounting measures and carbon tariffs, are regularly proposed as bipartisan solutions in ongoing climate debates. Americans should be on guard for these detrimental proposals, even when framed as bipartisan, because they represent a capitulation to a radical, anti-energy agenda.

Though often presented as a “free market,” bipartisan solution, a carbon tax aligns best with the progressive Left’s other so-called green policies. It follows the same pattern as other anti-American energy policies, seeking to distort market forces in favor of a Washington-determined energy mix. This would raise costs for everyday Americans and degrade quality of life, while failing to produce promised environmental results.

Those on the Right who support the idea of a carbon tax often argue that if it were to replace other taxes or regulations, it would be a net improvement. You’re naïve if you believe that such a compromise is realistic. Further, even as a “less bad” solution, a regressive consumption tax that discourages American productivity should be rejected.

Fundamentally, policies that raise the cost of energy raise costs across the economy, hitting low-income and fixed-income Americans the hardest. Fossil fuels provide low-cost baseload power that is essential to our quality of life, from growing food to powering hospitals to heating homes. Anti-energy policies have been central to prices increasing by a whopping 18.2% over the past three years. Today, gas and grocery prices remain up 45% and 21%, respectively. Meanwhile, despite trillions spent to force renewable power expansion, fossil fuels meet nearly 80% of American energy consumption, while wind and solar power sit at just around 4%. A carbon tax would add to the burden already borne by American families and businesses.

Further, when the push for a domestic carbon tax rears its head, a campaign for a carbon tariff or a carbon border adjustment mechanism (CBAM) is sure to follow. This is because Americans rightly would not want to absorb a competitiveness-crippling carbon tax while our industries are outsourced to foreign nations. The European Union is already working to implement a CBAM to account for its own economically destructive carbon pricing regime that is drowning businesses and families under high energy costs and sending industry fleeing.

Some have argued that the U.S. can take a different route and adopt a bipartisan compromise in the form of carbon tariffs without a domestic carbon tax. But Americans must also be wary if carbon tariffs are raised as a first, rather than a second, resort. This recent vote demonstrated that the concept of a carbon tax has lost a great deal of its appeal, particularly on the Right, making the idea of pushing a standalone carbon tariff more appealing. Proponents argue that a carbon tariff is a way to penalize high emitters like China and level the playing field for American workers. This is just another proposal disconnected from reality, however. Carbon tariffs, like carbon taxes, are a bad idea to begin with, as they raise costs while predicating our trade policy on radical climate goals. The idea is made worse because carbon tariffs cannot be levied without a domestic carbon price and are the gateway to a carbon tax.

So, either carbon taxes are introduced as a precursor for a carbon tariff, or a carbon tariff is introduced as a precursor for a carbon tax. Either way, American producers and consumers will suffer – not high carbon emitters like China, which would certainly benefit from the West’s climate-driven economic surrender.

Significantly, these costly measures begin with the arbitrary pricing of carbon and nearly impossible provisions to account for its release, both of which massively expand the bureaucratic state. In the U.S. alone, the Obama administration initially priced the social cost of carbon at $43/ton, the Trump administration at $7/ton, and the Biden administration at a whopping $190/ton. At the same time, we’ve seen increasing pushes for carbon-emission accounting across the economy, an extremely costly and virtually impossible task.

One critical, less discussed measure is the PROVE IT Act, a bipartisan bill recently approved by the Senate’s Environment and Public Works Committee, which uses average product-level emissions intensity as a method of carbon accounting. It’s clear that carbon accounting is the first step for tax and tariff impositions that would devastate the American economy. The Committee even rejected an amendment from Ranking Member Sen. Shelley Capito (R-WV) that would have prevented the data from being used to implement carbon taxes and tariffs. And though the amendment was rejected on party lines, the bill has moved forward with bipartisan support.

All Americans must beware of this kind of posturing that opens the door to bureaucratic expansion and drives us toward a carbon tax structure. It’s time that both parties refused to penalize the American energy that underpins our national security, our economic prosperity, and our daily lives. Let’s have more common sense in Washington. The American people deserve it.

Carla Sands is the former U.S. Ambassador to the Kingdom of Denmark. She currently serves as the Vice Chair of the Center for Energy & Environment at the America First Policy Institute. 

This article was originally published by RealClearEnergy and made available via RealClearWire.