Democrats weigh in on carbon tax after Manchin rejects key climate provision

WASHINGTON – Some House and Senate Democrats, following a decision by West Virginia Democrat Senator Joe Manchin III to kill a major component of President Biden’s climate plan, are moving to Plan B: a tax on air pollution. carbon dioxide.

A carbon tax, in which polluting industries would pay a levy for every tonne of carbon dioxide they emit, is seen by economists as the most effective way to reduce the emissions of the fossil fuels that heat the planet.

The near certain demise of the clean electricity program at the heart of Mr Biden’s program – which comes as scientists say aggressive policies are needed to avert the most devastating impacts of climate change – has sparked outrage from many. Democrats and has led many to say that now is the time for a carbon tax.

“I have had a carbon pricing bill in my office for three years waiting for the hour,” said Senator Ron Wyden, Democrat of Oregon, chairman of the Senate finance committee.

“What has been striking is the number of senators who have come to see me about this since the beginning of the fall – after Louisiana was hit by storms, the east coast flooding, the fires. Bootleg Forest here in my own state, ”Mr. Wyden said, speaking. by phone on Saturdays from Oregon. “Now there are a number of senators, key moderate senators, who have said they are open to this. And a lot of people in the House who said they would support him if the Senate sent him. “

But a carbon tax can be politically explosive. Industries could pass on their higher costs, leaving President Biden and his fellow Democrats vulnerable to claims they would raise taxes for the middle class, at a time when inflation and energy prices rise. Environmental justice advocates say a carbon tax allows companies to continue polluting, albeit at a higher cost, disproportionately harming low-income communities. And it’s not clear whether Mr Manchin, whose vote is crucial to Mr Biden’s legislative agenda, would support a carbon tax.

As a result, the White House is working to find alternatives to replace the $ 150 billion clean electricity program that had been the centerpiece of Mr. Biden’s climate program until just days ago, when Mr. Manchin indicated that he strongly opposed it. This program would have rewarded utilities that stopped burning fossil fuels in favor of wind, solar and nuclear power, and penalized those that did not. It was intended to push the country’s electricity sector to produce 80 percent of its electricity from clean energy sources by 2030, up from 40 percent today.

As they search for alternatives, White House officials are also considering a voluntary version of a cap-and-trade program, which would create a market for polluters to buy and sell allowances for a certain amount of money. ’emissions. They also plan to add to the $ 300 billion in tax incentives and clean energy credits that remain in the bill, while looking for ways to save parts of the clean electricity program.

A White House official said on Saturday that staff members were still in contact with members of Congress and had yet to agree to a final version of the climate provisions.

Cutting the climate change agenda could be one of the first big decisions in what will very likely be a painful process for Democrats as they cut their ambitious $ 3.5 trillion domestic policy agenda. Mr Manchin and another Democrat, Senator Kyrsten Sinema of Arizona, said they could not support this level of spending. Over the next two weeks, the White House will negotiate with Democrats for cuts to dozens of programs, as lawmakers attempt to reduce the initial bill to around $ 2 trillion.

Mr Biden suggested on Friday that one of the signature items on his agenda – two years of free community college – was also on the chopping block, and progressive lawmakers worried whether plans to provide time off family paid and to expand health insurance to include vision, dental and hearing benefits could survive.

Mr Biden and the Democratic leaders on Capitol Hill have set an Oct. 31 deadline for a deal that would allow Democrats to pass the bill with their very slim majorities in both houses of Congress.

In recent days, as White House officials tried to strike a deal, Manchin told them he would not support any legislation that included a clean electricity program. Mr Manchin, whose state is a major coal producer and has financial ties to the coal industry, said moving away from fossil fuels would undermine the country’s energy independence and worsen climate change.

After his opposition to the clean electricity program became public on Friday, several fellow Democrats expressed outrage.

“We have a moral obligation and a government mandate to adopt a policy that deals with climate change,” the progressive congressional caucus, made up of 96 members, wrote on Twitter. “Inaction is not an option.” For weeks, Progressive Democrats have been organizing rallies chanting, “No climate, no deal!” pressure the White House to include strong climate provisions. Several of these gatherings emphasized the importance of the clean electricity program.

Congress “cannot afford to dump” the climate provisions of the bill, New York Democrat Representative Alexandria Ocasio-Cortez wrote on Twitter. “This problem is bigger than ideology. It is a moral imperative for humanity and the future of our planet to reduce and eventually eliminate emissions, ”she wrote. “There are a lot of ways to do it, but we can’t afford to give up. “

Oregon Democrat Senator Jeff Merkley attended the “No Climate, No Deal” rallies. “Listen, my condition is burning. We are losing our snowpack, the ocean is acidifying, affecting our seashells, ”he said on Saturday. “This is a code red. “

Mr Merkley has said he will not vote for a reconciliation deal that does not include “important climate provisions”, but he said he is open to any option that halves carbon dioxide emissions by 2030 and produce carbon-free electricity by 2035.

He suggested additional wind and solar subsidies or proposals to speed up the transition to clean energy vehicles.

“The Biden team is going to have to explain how they are going to achieve these two goals,” he said, “because that’s how we stay on track.”

The clean electricity program that Mr. Manchin opposed was remarkable because it would include both incentives and penalties. The payment to electric utilities to switch to clean energy was the carrot; a penalty for companies that did not replace fossil fuels with clean energy was the stick. A carbon tax could provide a similar incentive, when combined with tax incentives, analysts say.

“If you were to replace the clean electricity program with a price on carbon, I think it would go a long way. This would put a lot of the stick elements that were removed back into place, ”said Zeke Hausfather, climatologist and policy analyst at the Breakthrough Institute, an energy and climate research organization.

Mr Wyden’s staff, who draft the wording for the carbon tax, are considering a national carbon tax that could start at $ 15 to $ 18 a tonne, and that would increase over time, according to two people familiar with the matter. who were not allowed to speak. on the file.

The tax would be applied directly to coal mining companies, large natural gas processing plants, and petroleum refiners, based on the emissions associated with their products, with one exception: petroleum refiners would most likely be charged for producing diesel fuel and petrochemicals, but not gasoline – a way to protect most American drivers at the pump.

An important part of the policy, Mr Wyden said, will be using the income for tax refunds or checks for poor and working-class Americans – especially those employed in the fossil fuel industry. “You have to show workers and families, when there is an economy in transition, that they will get their money back,” he said. “They will be healed. “

Emily cochrane, Zolan Kanno-Youngs and Jim Tankersley contributed reports.