Today, Congressman Jim McDermott (D-WA) introduced "The Managed Carbon Price Act of 2012," which proposes a rational and reasonable approach to both emissions reductions and a way to help address America's fiscal issues without hurting the economic recovery. McDermott's bill, an updated version of legislation he introduced in 2009, incorporates suggestions from the energy industry, environmental advocates, policy experts and economists.
"The American people care about the deficit and they're worried about climate change--and we can fix both without hurting the economy. My bill would reduce carbon emissions, and it returns all the money to consumers and deficit reduction. Businesses want this kind of predictability, consumers need to be protected, and we need to step up and address our climate and fiscal issues," said Congressman McDermott, who is a senior member of the House Ways and Means Committee -- the U.S. House's tax-writing committee. "What seems to have fallen by the wayside is concern over the climate and how carbon emissions are playing a factor in the extreme weather conditions we have been seeing. My colleagues are seeing this in their districts. Just yesterday, the USDA said that half of the counties in the United States -- 1,584 counties -- had been deemed "natural disaster areas' with 90% of those counties listed due to drought conditions. We can't keep ignoring these major environmental issues, and this proposal addresses emissions reductions in an economically responsible way."
The Managed Carbon Price Act (MCP) is simple to administer and easy to understand. It would place a price on carbon emissions that would increase over time, which would in turn create a market incentive to reduce emissions. Specifically, MCP imposes an emissions reduction schedule that would reduce CO2 emissions by 80% of 2005 levels within 42 years of enactment. The proceeds from MCP would go into a newly created Energy and Economic Security Trust Fund where 25% of the revenue would go towards deficit reduction and 75% would go back to the public to offset any price increases.
McDermott added, "Mitt Romney's Economic Advisor Greg Mankiw, Exxon-Mobil, the American Enterprise Institute and other conservatives have backed this concept because they know we have to wean ourselves off of carbon emitting energy sources, and do it in a way that doesn't hurt our economy and makes sense for businesses."
MCP is unlike a traditional carbon tax because it creates a flexible price system that provides emissions price certainty by accounting for volatility in the energy markets, requires specific emissions reductions, and addresses any increase in energy costs with dividend payments to the public. The MCP charges the Treasury Secretary with setting the price per one-quarter ton of CO2 or CO2 equivalent. A recent report from the Brookings Institution illustrated that if the starting price were set at $15 per ton, it would raise an estimated $80 billion, rising to $170 billion in 2030 and $310 billion by 2050.