WASHINGTON (May 21, 2014) – The R Street Institute welcomed today’s release of a discussion draft of legislation empowering states to adopt market-based solutions as a substitute for onerous EPA climate rules.

Authored by Rep. John Delaney, D-Md., the State’s Choice Act requires the EPA to offer states the option to impose state-level excise taxes on greenhouse gas emissions from regulated sources as a way to comply with section 111 (d) of the Clean Air Act. While imperfect, the draft bill is a step toward providing businesses with greater certainty by allowing states to substitute carbon taxes for forthcoming emissions rules the EPA is expected to release June 2.

“This legislation is a first step in the right direction toward allowing states to use a pricing mechanism as a substitute for a misguided command-and-control regulatory scheme,” said R Street Executive Director Andrew Moylan. “States should be able to take a market-based approach to blunt the economic impact of EPA rules while still reducing emissions.”

Moylan cautioned that more work is needed to ensure that states utilize carbon pricing as a complete substitute for the regulations, and urged states to devote the proceeds from any new excise taxes toward steep reductions in income, sales and other taxes.

“Under the new plan, states should ensure that any carbon price is completely revenue-neutral and takes full advantage of the alternative instead of implementing it in conjunction with damaging regulation, which will almost certainly place undue burdens on energy producers and consumers,” he said.