With the lame duck session underway, all in Washington are focused on the fiscal cliff. President Obama and congressional party leadership met November 16 to begin laying out a basic framework for negotiations going forward. Though they avoided discussion of particular proposals, the group attempted to demonstrate their willingness to work together in order to prevent the automatic tax increases and spending cuts scheduled to take effect on January 1.
With an increased interest in raising revenue in the face of the looming fiscal cliff, the idea of a carbon tax resurfaced as one potential resource, and debates quickly became heated last week. President Obama announced November 14 that the administration is unlikely to pursue a carbon tax before addressing the fiscal cliff. Gilbert Metcalf, deputy assistant treasury secretary for environment and energy, said the previous day that the administration had no plans to propose a carbon tax, and that any legislative action on climate change would need bipartisan support. House Republican leaders pledged November 15 to oppose a carbon tax. Americans For Prosperity spearheaded the No Carbon Tax Pledge, in which signatories vowed to oppose “any legislation relating to climate change that includes a net increase in government revenue.” Americans for Tax Reform pledged November 13 to ensure that a carbon tax does not become law, and the Competitive Enterprise Institute filed a lawsuit against the Treasury Department the same day seeking emails related to a carbon tax.
The Congressional Budget Office released a paper November 13 finding that a carbon tax would impose a disproportionate burden on low-income households. Meanwhile, the Massachusetts Institute of Technology released a report this summer finding that a carbon tax starting at $20/MT in 2013 and rising 4 percent annually could raise $1.5 trillion and reduce CO2 emissions 20 percent below 2006 levels by 2050.
At the same time, the president vowed last Wednesday to continue discussing with scientists, engineers, and elected officials in the coming weeks and months ways to make short-term progress on reducing carbon emissions and long-term progress on addressing climate change. The administration made it clear that it will not support any action that harms the economy, and offered no concrete agenda to expand on current administration policies to address climate change during his second term.
Other energy-related issues that may continue to be a part of the fiscal cliff negotiations include various tax extenders pieces, Defense Reauthorization, which includes a debate over the military’s use of biofuels, and energy efficiency legislation.
Members of the Governors’ Wind Energy Coalition sent a letter November 12 to congressional leaders calling for a multiyear extension of the production tax credit during the lame duck session. The group argued that letting the tax credit expire could place 37,000 jobs and up to $10 billion in private investment in wind energy in jeopardy.