WASHINGTON, May 23 (Reuters) - A tax on carbon dioxide emissions could help the United States mitigate climate change while significantly increasing government revenue, the nonpartisan Congressional Budget Office said this week.
President Barack Obama supports plans to price carbon dioxide emissions from power plants, tailpipes and factories that have been blamed for worsening climate change.
Levying a tax on such emissions would both curb carbon dioxide pollution and become a meaningful source of federal revenue, the report concludes.
“A carbon tax that covered the bulk of (carbon dioxide) emissions or the carbon content of most fossil fuel consumed in the United States could generate a substantial amount of revenue,” reads the report Effects of a Carbon Tax on the Economy and the Environment released on Wednesday.
Specifically, the report points out that a 2011 CBO study found that a program that set a $20 charge for emitting a ton of carbon dioxide and then increasing the tariff from there would raise a total of nearly $1.2 trillion during its first decade.
Such a move would also curb total U.S. emissions of carbon dioxide by about 8 percent.
A plan to put a price on carbon pollution fell flat in Congress in 2010 and the White House has said that there is no point in proposing such a plan in the near-term since the Republican-controlled House of Representatives is so hostile.
A carbon tax would certainly harm the economy in the near-term and policymakers may chose to use some of the revenue to offset the higher costs of goods and services that would become a reality under such a tax, the report concludes.
But variable weather, increased droughts and rising sea levels are among the future costs of climate change that could be diminished if a carbon tax were put in place, the report says. (Full report: link.reuters.com/pur38t)
“Given the inherent uncertainty of predicting the effects of climate change, and the possibility that it could trigger catastrophic effects, lawmakers might view a carbon tax as a reflection of society’s willingness to pay to reduce the risk of potentially very expensive damage in the future,” the report says.
The report was requested by Representative Henry Waxman, the ranking Democrat on the U.S. House Energy and Commerce Committee.