CA Senator Darrell Steinberg proposed a change yesterday to California’s nascent cap-and-trade program that would replace next year’s cap on fuel emissions with a per-gallon carbon tax. Steinberg called it a “broader, more stable, and more flexible” way to reduce emissions from fuels than cap-and-trade.
His proposal would apply the revenue raised from the tax towards tax relief for poor and middle-income Californians, who would feel the greatest pinch from higher gas prices. That could help defuse anger at having to pay more at the pump, while still discouraging demand for gas. “Under either [program], consumers will pay more at the pump. That’s necessary,” said Steinberg. “If carbon pricing doesn’t sting, we won’t change our habits.”
Reactions to Steinberg’s proposal so far have been mixed. The Western States Petroleum Association prefers it as “a transparent alternative” to cap-and-trade, and the Environmental Defense Fund criticized what it sees as a mid-stream switch that could “compromise” CA’s emission reduction strategies.
Stuart Cohen, executive director of TransForm, said ”we strongly believe that California is creating an excellent cap-and-trade program that is, and will work, effectively. Yet a carbon tax is an extremely clear and straightforward, and ultimately more predictable, way to approach the fuels sector.”
“If this had been offered as a serious proposal seven years ago, we would have thought it was heaven-sent,” he added. “I don’t think it makes sense to reject it outright. It’s certainly worth having the discussion” about cap-and-trade vs. a carbon tax.
John White of the Clean Power Campaign, a coalition of public interest groups working for clean fuels, says his organization has no official stance yet on the proposal. However, he said, “This is a good conversation to have. A carbon tax is a different way to do the same thing. The point of collection is also at the pump, but with cap-and-trade there’s no clear signal except for a higher price, and no predictability of what that price would be.”