Democrats are exploring adding a carbon tax to their massive $3.5 trillion budget bill as a way to offset some of the bill’s cost. Senate Finance Committee Chair Ron Wyden told CNN that Senate Majority Leader Chuck Schumer asked him to look at carbon pricing, and that discussions are ongoing.
“We’ve got a lot of senators who care deeply about it,” Wyden said. “We’ve been having those discussions.”
Wyden added he sees a carbon tax as complimentary to the array of clean energy tax credits his committee is also drafting, which would reward companies who reduce carbon emissions and save energy.
A carbon tax would be a way to reduce fossil fuel emissions and pay for other measures in the bill. The government would set a price for carbon emissions, and emitters would pay that price for each ton of carbon emitted.
It has long been favored by some Senate Democrats as an efficient and simple way to curb fossil fuel emissions, but the Biden administration has been hesitant to back it. A White House spokesperson didn’t immediately return a request for comment on the latest effort.
Wyden told CNN he’s looking at structuring a carbon price in a way that will be fair to middle class families, who he said might be concerned about how it could impact them. He’s looking at ways to redistribute some of the revenue back to taxpayers through cash payments.
“When you look at past efforts, what you always see is middle class people – because they know that a carbon tax will involve a transition – want to know specifically how they’re going to fare in terms of their budget and that means you’ve got to make them whole with the proceeds,” Wyden said.
The New York Times first reported that Democrats were exploring the tax.
Where some moderates stand on this: What’s still unclear is whether two key Senate Democratic moderates – Sens. Kyrsten Sinema of Arizona and Joe Manchin of West Virginia – would support the measure. Sinema recently told the Arizona Republic that she supports tackling climate change, but opposes Democrats’ plans to increase the corporate and income tax rates. Manchin, who represents a coal state, is has said he doesn’t want to speed up the transition away from coal.
“The transition’s already happening,” Manchin told CNN. “So I’m not going to sit back and let anyone accelerate whatever the market’s changes are doing. Coal is the most reliable we have.”
Wyden said he’s involved in “collegial” climate negotiations with Manchin, but declined to say whether the West Virginia senator supports his clean energy tax credits.
“He and I talk all the time,” Wyden told CNN, adding, “I’m not going to get into our private conversations.”