Tax on Carbon-Based fossil Fuels Seeks to Slow Climate Change

Rep. Pete Stark (D-CA), a senior member of the Committee on Ways and Means with jurisdiction over tax policy, has introduced the “Save Our Climate Act of 2009.”  This legislation imposes a tax on carbon-based fossil fuels to slow climate change.

Specifically, the Save Our Climate Act imposes an initial tax of $10 per ton of carbon content on fossil fuels when they are initially removed from the ground or imported into the United States, resulting in approximately a 2 cents per gallon increase. The tax will increase by $10 each year, freezing when a mandated report by the Internal Revenue Service and the Department of Energy determines that carbon dioxide emissions have decreased by 80 percent from 1990 levels. The 80 percent level is the reduction estimated by the International Panel on Climate Change to be necessary to prevent the catastrophic consequences anticipated from rapid climate change.

According to Rep. Stark, this bill does not prescribe how the revenue will be spent, “but it is appropriate that we consider relief for low and middle-income consumers who may face modestly higher energy costs, and investments in alternative energy sources, health care, and education.”

He explained in his speech introducing the bill that the “’Save Our Climate Act’ will generate a small energy price increase each year, equal to about 2 cents per gallon of gas annually. Consumers over the past year have endured increases one hundred times that. The only difference is that the increase in price went to overseas coffers, not to build our transportation networks, provide relief for workers, and health care for our citizens.  As the tax rate increases, fossil fuel prices will increase.  Producers will have an incentive to invest in cleaner alternative energies, and those alternative energy sources will become more competitive.”

The bill has a title “To amend the Internal Revenue Code of 1986 to reduce emissions of carbon dioxide by imposing a tax on primary fossil fuels based on their carbon content,” and was referred on January 15, 2009 to the House Committee on Ways and Means.

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