Regulatory pre-emption as prelude to carbon pricing

Aug 3, 2017

A significant contributor to the polarizing politics of climate-mitigation policy is the concern that any intervention to address greenhouse gas emissions comprehensively will necessarily be expensive. However, such analysis fails to recognize the multiple federal policies that already price carbon in economically and administratively expensive ways that restrict choice and drive prices up for consumers. In some cases, these policies have not been approved or defined by Congress. This opaque and expansive patchwork of policies allows the federal bureaucratic engine to operate without responsibility to the American public.

Consistent with his pledges to revive the coal industry and use domestic oil and gas resources to execute a strategy of “energy dominance,” President Donald Trump has started to eliminate or reconsider many of these policies. However, in order to curb such overreach permanently, Congress must pass legislation that clarifies or eliminates a number of authorities across government agencies. Once the bureaucratic quagmire is reduced, lower carbon emissions from the energy, industrial and transportation sectors would remain achievable.

R Street has long advanced the concept of a revenue-neutral carbon price as an approach to mitigate long-term climate risk; to finance deep cuts to or the outright elimination of the corporate income tax; and to pre-empt federal policies that currently price carbon. This paper details why pre-emption legislation is necessary and the particular policies Congress should target for elimination upon the adoption of a federal carbon price alternative.

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