Latest US climate Bill follows Australian lead

Parliament house flag post

Latest US climate Bill follows Australian lead

Posted 18/02/2013 by Anita Talberg


The US seems to be following in the footsteps of Australia, at least in terms of climate policy. Last week, Senators Sanders and Boxer introduced into Congress a Bill that establishes a carbon price. Like Australia’s Clean Energy Act, the US’s proposed Climate Protection Act would see the majority of carbon tax revenue flowing back to households to assist with rising energy prices. Also proposed, and comparable to Australia’s Clean Energy Finance Corporation, is a $500 billion program to co-invest in, or provide guarantees for, energy efficiency and renewable energy projects.

Details of the US Bill
There are a number of components to the Bill. It sets a 2050 target to reduce greenhouse gas emissions by 80 per cent below 2005 levels, which is on par with Australia’s 2050 target. To meet this commitment, the Bill establishes from 2014 a $20 tax on every tonne of carbon dioxide emitted (or carbon dioxide equivalent in the case of methane) increasing by 5.6 per cent each year for ten years. In contrast to the Australian scheme, where the cost is imposed on the emitting company, the proposed US tax is applied at the point of fossil fuel extraction: at either the mine, refinery or processing point. According to the sponsoring Senators’ statement, the scheme would cover 85 per cent of US emissions and generate $1.2 trillion over the ten years. This dwarfs Australia’s $35 billion revenue expected from the sale of permits in first four years of the scheme.

The Bill allocates 60 per cent of the tax revenue to assist households in managing increases in energy prices. The remaining 40 per cent would be deposited into a Pollution Reduction Trust Fund to be distributed thus:
  • $7.5 billion per year to assist emissions-intensive industries to ‘mitigate the economic impacts of the fee imposed’, with at least a quarter for investments in energy efficiency. The same function in Australia is performed by the $8.6 billion Jobs and Competitiveness Program, the $1.2 billion Clean Technology Program, the $300 million Steel Transformation Plan.
  • $1 billion per year for vocational training to help transition jobs towards a low-carbon economy. This program strongly resembles Australia’s $1.3 billion Coal Sector Jobs Package.
  • $5 billion per year for a Weatherization Assistance Program for Low Income Persons. Could this be anything like Australia’s now defunct Home Insulation Program?
  • $2 billion per year into the existing Advanced Research Projects Agency-Energy (undertaking R&D into energy technologies), thus tripling its budget.
To ensure that US companies are not unfairly disadvantaged by the carbon price, the Bill proposes an equivalent import tariff on fuels and carbon-intensive products. Only products deriving from a country with an equivalent price on carbon are exempt. The revenue from these so-called ‘carbon tariffs’ would fund climate change adaptation measures and low-carbon transport solutions (including carpooling incentives and electric vehicle stations). What is unclear is how carbon tariffs may affect trade agreements.

In addition to the tax, the Bill creates a Sustainable Technologies Finance Program funded at $5 billion over 10 years. This Program is designed to engage in public-private agreements to fund low-carbon technologies in a bid to attract $500 billion in investment. Australia’s newly established $10 billion Clean Energy Finance Corporation has the almost identical mandate.

The Bill is complemented by a second one, the Sustainable Energy Act that proposes to eliminate fuel subsidies and use some of the revenue towards reducing the US debt.

What does this mean for Australia?
Whether the US enacts a type of carbon pricing is significant in the context of the upcoming Australian election. Australia’s own carbon pricing has been criticised on the grounds that other major emitters are not acting similarly. The Bill is likely to be debated in the American summer and therefore could secure passage before our election. However, this is not the first time carbon price legislation has been proposed in the US. A FlagPost from 2010 provides details of four previous attempts. Each time the legislation has failed to pass.

The difference with this new Bill is that it returns much of the revenue to consumers. Will this make the legislation more palatable to Republican congressmen, who are generally against any increases in energy prices? Already this year 18 Republicans have introduced a resolution barring a carbon tax.

President Obama has recently suggested that he is prepared to employ whatever means are at his disposal to see US action against climate change. In his 2013 State of the Union address, he urged Congress to ‘pursue a bipartisan, market-based solution to climate change’, otherwise he would direct his Cabinet to ‘come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change’. The weakness of an Executive Order is that it can be repealed by either Congress or President. Should a Republican President win the next election in 2016, any Executive Order could be completely revoked; and probably would be—just as the Coalition has vowed to repeal the Australian carbon price.


Thank you for your comment. If it does not require moderation, it will appear shortly.

Add your comment

[Click to expand]

We welcome your comments, or additional information which is relevant to a post. These can be added by clicking on the ‘Add your comment’ option above. Please note that the Parliamentary Library will moderate comments, and reserves the right not to publish comments that are inconsistent with the objectives of FlagPost. This includes spam, profanity and personal abuse, as well as comments that are factually incorrect or politically partisan. We will close comments after three months.




Captcha
Generate a new image
Type characters from the image:

Facebook LinkedIn Twitter Add | Email Print

FlagPost

Flagpost is a blog on current issues of interest to members of the Australian Parliament


Parliamentary Library Logo showing Information Analysis & Advice

Archive

Syndication

Tagcloud

Refugees asylum climate change immigration Australian foreign policy parliament social security welfare reform school education welfare policy health financing elections Australian Defence Force emissions trading women higher education private health insurance people trafficking Indigenous Australians illicit drugs gambling health reform federal election 2010 United Nations Employment Asia Middle East Medicare Australian Bureau of Statistics statistics sport health forced labour federal budget Afghanistan Industrial Relations Carbon Pricing Mechanism politics income management dental health United States aid disability child protection environment poker machines Australia in the Asian Century Australian Sports Anti-Doping Agency steroids World Anti-Doping Agency National Disability Insurance Scheme detention aged care 43rd Parliament slavery health system Fair Work Act Australian Public Service governance labour force people smuggling transport debt taxation international relations constitution New Zealand food WADA Australian Crime Commission pharmaceutical benefits scheme public service reform law enforcement children's health Aviation foreign debt gross debt net debt defence capability parliamentary procedure Senate Senators and Members ALP ASADA Australian Federal Police criminal law Newstart Parenting Payment multiculturalism Youth Allowance sea farers accountability Papua New Guinea youth paid parental leave pensions same sex relationships corruption coal seam gas customs planning federal election 2013 Australian Electoral Commission doping OECD crime health risks International Women's Day Gonski Review of Funding for Schooling sex slavery Special Rapporteur Northern Territory Emergency Response social policy terrorist groups Australian Security Intelligence Organisation carbon tax mining High Court Higher Education Loan Program HECS military history electoral reform employer employee renewable energy regional unemployment fishing European Union Federal Court family assistance skilled migration banking United Nations Security Council Australian economy forestry food labelling vocational education and training Drugs UK Parliament welfare systems Indonesia social media children federal state relations Constitutional reform local government codes of conduct terrorist financing homelessness Parliamentary remuneration money laundering Trafficking in Persons Report energy science social inclusion human rights paternalism terrorism World Trade Organization Australia public health China housing affordability bulk billing political parties water productivity health policy Governor-General US economy trade unions domestic violence export liquefied natural gas foreign bribery firearms question time speaker superannuation public housing election results by-election expertise public policy climate Intergovernmental Panel on Climate Change leadership voting Department of Agriculture Fisheries and Forestry regulation Pacific Islands reserved seats research and development new psychoactive substances synthetic drugs UNODC ASIO intelligence community carbon markets animal health middle class welfare ADRV Census Indigenous constitutional recognition of local government referendum consumer laws PISA competition policy royal commission US politics violence against women language education baby bonus Leaders of the Opposition citizen engagement policymaking Australia Greens servitude Trafficking Protocol forced marriage Population rural and regional mental health alcohol entitlements ministries Hung Parliament social citizenship maritime Iran transparency ANZUS regional students school chaplains federal budget 2011-12 salary Medicare Locals primary care Building the Education Revolution smoking plain packaging tobacco cigarettes Asia; Japan; international relations Work Health and Safety Migration; asylum seekers; regional processing China; United States; international relations fiscal policy Racial Discrimination Act; social policy; human rights; indigenous Australians Foreign policy Southeast Asia Israel Palestine asylum refugees immigration political finance donations foreign aid disability employment Economics efficiency human rights; Racial Discrimination Act employment law bullying asylum seekers Animal law; food copyright Australian Law Reform Commission industry peace keeping contracts workplace policies same-sex marriage disorderly conduct integrity retirement Parliament House Australian Secret Intelligence Service welfare standing orders prime ministers election timetable sitting days First speech defence budget submarines workers financial sector Canada Somalia United Kingdom GDP Tasmania world heritage political engagement leave loading Trade; tariffs; safeguards; Anti-dumping public interest disclosure whistleblowing Productivity Commission limitation period universities Ireland cancer gene patents genetic testing suspension of standing and sessional orders live exports infant mortality honorary citizen railways disciplinary tribunals standard of proof World Health Organisation arts international students skilled graduate visas temporary employment visas apologies roads Italy national heritage NHMRC nutrition anti-dumping Rent Assistance obesity evidence law sacrament of confession sexual abuse US presidential election international days DFAT UN General Assembly deregulation Regulation Impact Statements administrative law small business Breaker Morant regional engagement social determinants of health abortion Members suspension workplace health and safety marine reserves hearing TAFE Victoria astronomy resources sector YMCA youth parliament Korea fuel rebate Australian Greens presidential nomination Racial Discrimination Act political parties preselection solar hot water Financial Action Taskforce Horn of Africa peacekeeping piracy Great Barrier Reef Stronger futures political financing political education Social Inclusion Board early childhood National Quality Framework for Early Childhood Education and Care Murray-Darling Basin sanctions Norway hospitals republic President Barack Obama Presidential visits qantas counselling Korean peninsula Work Choices biosecurity hendra environmental law federalism federation preselection therapeutic goods Therapeutic Goods Administration plebiscites computer games pests suicide nuclear COAG Ministerial Councils floods ADHD stimulant medication advertising electricity extradition standards conscience votes poverty preventative health rural health coastal erosion Parliamentary Budget Office NATO work-life balance

Show all
Show less