Making Fossil Fuels Pay for Their Damage
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 …
This is the second in a two-part series on the implications of the historic climate and health spending package, which President Biden signed into law earlier this week. Read the first post here.
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.
It is well known that the fossil fuel industry was built in part by concentrating the costs …
This is the first in a two-part series on the implications of the historic climate and health spending package, which President Biden signed into law earlier this week. Read the second post here.
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.
In this regard, the new law represents a significant departure from past unsuccessful legislative efforts to tackle the climate crisis and, as we argue in Part I of this series, is a …
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