How Red States will comply with the Clean Power Plan

When the Environmental Protection Agency (EPA) released its final rule for the Clean Power Plan (CPP) in August, Republican Senate Leader Mitch McConnell was apoplectic. He suggested that governors from all 50 states refuse to enforce the rule. This surprised no one, given McConnell’s long history of criticizing the EPA, and his home state’s (Kentucky’s) heavy reliance on coal.

What was perhaps more surprising, is that out of the 31 Republican governors, only five have threatened to join the boycott, and even they were careful to hedge their rhetoric. In addition, two of those (Bobby Jindal and Scott Walker), were seeking the Republican nomination for president at the time, and thus prone to political posturing for the Republican base.

So what of the other 26 Republican governors? Some may follow suit eventually, or delay as long as possible. For governors hoping to, well, govern, and avoid the costly litigation that non-compliance would inevitably entail, there may be an alternative to the EPA’s recommended cap-and-trade programs, which are widely hated on the right.

Proponents of revenue-neutral carbon taxes have long presented the idea as a way to break the political impasse on climate policy. While the tax would put a price on carbon pollution and drive down emissions to meet the EPA’s targets, states could avoid growing the size of government by returning all the revenues to businesses and households. States could achieve this by lowering other taxes, for example on consumption or income, or even mailing checks directly to households. If done properly, the tax shift can offset the regressive nature of carbon taxes.

The idea faces obstacles – many are skeptical that any sort of ‘grand compromise’ can be reached in an increasingly polarized electorate. Liberals have argued that Republicans are unwilling to pass a tax of any kind, and don’t have any interest in climate policy. They would rather use the revenues to help communities adapt to climate change or fund other priorities, than quixotically extend an olive branch to unresponsive Republicans. Many on the right have also shot down the idea, including anti-tax activist Grover Norquist, who compared a carbon tax to a tapeworm.

Still, the Clean Power Plan may have opened an opportunity. R-Street and the Niskanen Center, two right leaning think tanks, lobbied hard for the EPA to include a carbon tax as a compliance mechanism. And buried in the 1,500-page document, almost entirely devoted to explaining cap-and-trade, a single sentence on page 899 indicates that the EPA would view a carbon tax as an acceptable alternative.

Since most states already have taxes on fossil fuels, a carbon tax would be far simpler administratively than cap-and-trade; the new taxes would simply piggyback on the old ones, proportionate to the carbon content of the fuel. And since the targets set by the Clean Power Plan aren’t that ambitious in most cases, a carbon tax wouldn’t have to be that high for a state to achieve compliance. R-Street crunched the numbers, showing taxes as low as $2/ton of CO2 would be sufficient to meet the EPA’s goals in states like Louisiana and Kentucky. Some administrations, especially those in states that have to deal with divided legislatures, may view compromise more favorably than resistance.

The Clean Power Plan continues the US’s long tradition using the states as testing grounds for new policies. Varying local conditions and politics will likely result in new and innovative ways to meet emissions targets, carbon taxes among them. Last week Politico reported that Utah Governor Gary Herbert, the Republican chair of the National Governors Association, was directing his state agency to cooperate with the EPA, and open to reviewing a carbon tax. The Niskanen Center also says that they have been approached by several red-state environmental agencies to discuss revenue-neutral carbon taxes. Grassroots campaigns for carbon taxes are already underway in a number of states.

While Mitch McConnell and the Republican presidential candidates use the national spotlight to pander to fossil fuel interests and climate deniers, Republican governors are working behind the scenes. Out of these ‘laboratories of democracy’, perhaps policies will emerge that can help break the national impasse.

Image courtesy Flickr, Martin Nikolaj Bech.

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