The big national cap-and-trade plan died on Capitol Hill five years ago, and it remains very much dead. A carbon tax — the perennial academic solution for curbing greenhouse-gas emissions — had even less traction in Congress and lives on mostly in think tanks.
But President Obama's Environmental Protection Agency climate regulations for power plants, unveiled on Monday, may give those policies new life at the state level.
In a change from the draft plan, the final EPA rule now explicitly says states can use "fees" (i.e., taxes) as a tool for meeting their emissions-cutting requirements. That's on page 899 of the massive 1,560-page rule. Plans that states craft to comply with the mandate, the rule states, "could accommodate imposition by a state of a fee for CO2 emissions from affected [electric generating units], an approach suggested by a number of commenters."
That language is a rather brief blessing but enough to excite the ad-hoc, Left-Right mix of environmentalists, economists, and a few conservative carbon-tax advocates who have long been swimming upstream at the national and state level.
David Bookbinder, a former high-level Sierra Club lawyer, says carbon-tax backers will immediately begin fresh discussions about how they can convince states to get on board. "We have all been waiting for this," said Bookbinder, now an adjunct scholar at a think tank called the Niskanen Center. "The calls will probably start tonight or tomorrow."