GOP-sponsored carbon tax, Trump auto emissions rollback both share underlying logic
One proposal by Florida Republican Congressman Carlos Curbelo, plans to put a $24-per-metric-ton price on carbon nationwide as a way to cut U.S. greenhouse gas emissions (GHGs) by 40 percent by 2030. The other “solution” to be announced by Trump’s Environmental Protection Agency (EPA) ends the Obama-era tightening of auto mileage regulation that was a major government method to limit greenhouse gases.
Given such apparent contradiction, it’s not unreasonable to ask why a Republican would propose to cut emissions in one place while adding them in another. As a practical matter, though, the carbon tax has little chance of passage while plateauing auto emissions indefinitely will almost certainly be implemented and will likely add to carbon emissions from the U.S. car fleet.
But despite initial appearances, the two proposals are not really in opposition. What they have completely in common is a desire to create regulations that make it easier for businesses and consumers to make truly market-based decisions without government intervention and coercion in private markets.
In a perfect policy world (one can dream!), a properly designed carbon tax would eliminate the need for fuel economy standards. Automakers would simply adjust to consumer demand and prepare for incrementally higher fuel prices that would be easy to anticipate. Such transparency would likely grow the national economy, bring a much greater efficiency to transportation taxes and probably save the U.S. auto industry from its present reputation as the maker of mediocre vehicles.
Because a carbon price taxes consumers directly on their carbon fuel use, consumers and entrepreneurs would move pretty much simultaneously toward low-carbon technology to save money, and while the Curbelo proposal is unlikely to go anywhere fast, it’s viewed by many—including R Street—as a policy move “in the right direction.”
Meanwhile, the use of Corporate Average Fuel Economy (CAFE) standards has arguably been one of the least successful policy programs in the last 40 years. By focusing regulations on the square footage of each vehicle, rather than its net emissions; by allowing two separate categories—light cars and light-trucks—rather than one overall fleet category and by allowing three separate regulatory agencies to regulate emissions, the federal government didn’t lower overall fuel use, it simply created industrial policy masquerading as environmental policy.
As part of the effort to plateau emissions, the EPA will propose revoking the waiver granted to California in the 1970 Clean Air Act. Litigation between the state of California and the federal government is certain to follow and could last longer than the Trump administration itself. By the early part of the next decade, the country could be closer to a consensus about how to manage car and truck emissions. If so, Curbelo’s carbon tax proposal and major changes to CAFE standards would simply be seen as sound ideas meant to be taken together.
William Murray is federal energy policy manager at the R Street Institute