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Carbon Tax Could Accelerate Energy Transition In The Mountain West

Andreas Prott
Adobe Stock

Janet Yellen is President Joe Biden's pick to be treasury secretary. And she's been a big proponent of a carbon tax.

That kind of tax generally refers to the government taxing a product based on the amount of carbon emissions that went into making it. It's essentially a way to disincentivize burning fossil fuels.

Thornton Matheson warns that a carbon tax brings plenty of challenges, though. Matheson is a senior fellow with the Urban-Brookings Tax Policy Center, and she says fossil fuel companies and low-income Americans will be hit the hardest.

"You do disproportionately impact the poor because they spend a larger share of their budget on energy," Matheson said. "But actually wealthier people will end up paying a larger portion of the tax revenue overall."

But Matheson said research is showing low-income communities are disproportionately impacted by pollution from fossil fuel industries.

Matheson also noted that industries that consume a lot of energy could be heavily impacted, too, which could in turn impact state and national economies.

"One argument against having a U.S. carbon tax is, well, to the extent that other countries are not introducing these carbon taxes, if we introduce one, then our goods are not going to be competitive," she said. "And you can apply this also within the U.S."

Kyle Pomerleau is a fellow with the American Enterprise Institute, a conservative think tank. He says the tax could hurt the Mountain West region's fossil fuel industries and raise prices for consumers. But he says some analyses show that mitigating climate change could ultimately help the U.S. economy.

"So to the extent that we mitigate that, incomes could be higher in the future than they otherwise would be if we just allowed climate change to take place under current projections," he said.

Both Pomerleau and Matheson noted that the money earned with the tax could flow back to families it affects the most, though. That is, Congress could use the money to send out things like rebates or direct payments to lower-income U.S. taxpayers.

"I have projected in the past that a $50 per metric ton carbon tax could raise about $2 trillion over a decade," said Pomerleau. "And that would be sufficient to enact a new program that people would call a carbon dividend. It's a monthly payment that could go to households to offset the costs of higher costs of living."

He said Congress could also use the money in other ways, though, like promoting clean energy technology and jobs associated with that.

Here's a carbon tax explainer from the Center on Global Energy Policy at Columbia University:

This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Boise State Public Radio in Idaho, KUNR in Nevada, the O'Connor Center for the Rocky Mountain West in Montana, KUNC in Colorado, KUNM in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.

Copyright 2021 Boise State Public Radio News. To see more, visit Boise State Public Radio News.

Madelyn Beck is Boise State Public Radio's regional reporter with the Mountain West News Bureau. She's from Montana but has reported everywhere from North Dakota to Alaska to Washington, D.C. Her last few positions included covering energy resources in Wyoming and reporting on agriculture/rural life issues in Illinois.
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