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Dems Shoot Down Carbon Tax Backup Plan; Romney Not Happy

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CARBON TAX TROUBLE: That was fun while it lasted. Senate proponents of including a carbon tax in Democrats’ reconciliation package to replace the fading clean electricity performance program are quickly being reminded that it faces massive political headwinds of its own.

“The carbon tax is not on the board at all right now,” Sen. Joe Manchin, the centrist West Virginian who also opposes CEPP, told reporters this morning after departing an Energy Committee hearing he chaired.

It’s not just Manchin. Sen. Jon Tester of Montana, another relative centrist, told Politico, “you might have problems with me on a carbon tax.”

“It’s just not going to work,” Tester added.

House Democrats, meanwhile, did not include carbon pricing in their version of the reconciliation package, as the idea has fallen out of favor with liberals.

“I don’t think you can have any carbon pricing bill that you could introduce to the House today that you would get the majority of Democrats,” Rep. Sean Casten of Illinois told Josh and co-host Neil Chatterjee for a new episode of the “Plugged In” podcast that just dropped this afternoon (check it out here, and also on Apple Podcasts and Spotify).

“I share that concern,” Rep. Jared Huffman, a California Democrat, told Josh this afternoon. “Putting aside economists just love it and some people think it’s the holy grail, we’ve got a difficult political needle to thread here and I am skeptical carbon pricing can be made to work.”

Casten specifically took aim at an idea championed by Senate Finance Committee Democrats, led by chairman Ron Wyden of Oregon, who want to use the revenue from the tax for rebates or checks for low-income people.

Casten’s point underscores that Democrats would have a hard time agreeing on how to use the revenue, as some prefer to use it for clean energy and infrastructure resilience investments.

“An even worse idea is tax and dividend because if you tax and dividend you say, ‘I am going to put a price on carbon and then I am going to expressly guarantee the money I take in will not be used for C02 reductions,’” Casten said.

Not giving up on CEPP: Casten is continuing to gun for the CEPP program, and warned fellow Democrats such as Manchin that weakening or removing it is tantamount to not giving a “rat’s ass about climate.”

“If you take out or weaken the CEPP it’s no longer a climate bill,” Casten added.

Casten, a clean-energy businessman and scientist, says that a program of incentives and penalties for utilities to generate more zero-carbon power is more effective than a carbon tax.

A carbon tax would raise the cost of fossil fuels but not necessarily induce developers to build more clean energy to replace coal and natural gas.

“I built clean energy projects in response to incentives,” Casten said. “I never built a clean energy project because my competitors had a change in their cost structure. The CEPP is not ideal, but much closer to the optimum than a simple carbon tax would be. There is enough people in the House that share my views it would be very hard.”

The advocacy of Casten and other Democrats has done nothing to persuade Manchin on CEPP.

And with broader opposition to carbon pricing among their ranks, that means Democrats are scrambling to come up with a mix of policies that can ensure President Joe Biden has a shot at meeting his climate change goals.

BUT…CARBON TAX ‘ON THE TABLE’ FOR WHITE HOUSE: A carbon fee, or tax, is “on the table,” according to top Biden domestic climate adviser Gina McCarthy.

“There’s a lot of things in the mix now that people are thinking about … climate fees are one of them, whether it’s a sector-based or it’s a broad-based fee, none of those issues are off the table,” McCarthy told a meeting of Biden’s council of advisers on science and technology, Reuters reported yesterday.

Up until now, the White House has been quiet about carbon pricing, preferring to focus on promoting CEPP, its top priority to decarbonize the electricity sector.

Sen. Sheldon Whitehouse, Democrat of Rhode Island, recently told Josh he’s tried to convince administration officials that exempting gasoline from a carbon price included in reconciliation would make the tax consistent with Biden’s pledge to not raise taxes on people making less than $400,000 a year.

ROMNEY GOADS DEMOCRATS ON CARBON TAX: Who saw this twist coming? Sen. Mitt Romney of Utah, one of the few Republican proponents of carbon pricing, is criticizing Democrats for not pulling harder for including a tax in reconciliation.

“For the life of me I don’t understand why Democrats right now through reconciliation are spending and taxing on their own but they are not planning on putting in place a price on carbon,” Romney said yesterday in a conversation with the Milken Institute (hat tip to Tom Moyer of Utah Citizens’ Climate Lobby for flagging ).

“They talk about this as if this is the holy grail and they know it’s the only thing that really makes a big difference but they are not planning on doing it in reconciliation,” Romney added.

Romney has previously told Josh he is seriously considering and reviewing the merits of a carbon tax that would return the revenue to taxpayers, but he has not yet introduced or co-sponsored the legislation.

Read rest at Washington Examiner

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