Pretty sure the idea came from ... the bill's coauthors. Sens. Lindsey Graham (R-SC) and Joe Lieberman (I-Conn.) discussed the prospect of a
carbon fee on transportation fuels with reporters shortly before the April recess. "It's on the table," Lieberman said following a March 25 meeting with industry groups. And Graham explained that the oil industry favored a fuel fee if that would mean the industry wouldn't be included under a hard cap on carbon.
It's not entirely clear if what's going on here is a rhetorical shift (nobody likes the word "tax" of course), or an actual policy change. This could be much like the whole "cap and trade is dead" dance the senators are performing, in which they declare the policy deceased while, in reality, some form of it will likely be included in their bill.
The senators are supposed to release a draft on Monday, but from everything I'm hearing on the Hill, there are still lots of loose ends to be tied up. Of course, the constant shifting has raised concerns about whether Kerry and his colleagues can deliver. As one industry source
put it to Climate Wire last week:
"He's literally trying to promise everything to everybody," said one industry source close to the negotiations. "While his enthusiasm is appreciated, there's grave doubts he can hold the promises he makes."
From Inhofe EPW Press
The following articles discuss the proposed 'linked fee" in Kerry-Graham-Lieberman:
LA Times: Senators consider gasoline tax as part of climate bill -
(04/14/10) Some industry analysts and environmentalists question how much a tax would do to reduce emissions from gasoline, particularly if the extra cost to motorists is measured in cents, not dollars. Proponents call the tax approach under consideration a
"linked fee," because it links the extra cost for gasoline to the average cost of greenhouse gas emission permits created through a so-called cap-and-trade system for electric utilities. That system would set a declining limit on emissions from power plants and force utilities to buy permits, on a trading market, to emit heat-trapping gases. Under the linked-fee proposal, gasoline taxes would rise in tandem with the prices of industrial emission permits, or fall if the price of permits declines.
Inside EPA: Senators Seek Oil Industry, Chamber 'Cease Fire' On Climate/Energy Bill -
(04/02/10) The trio is urging API and the Chamber to mute any potential future opposition to the bill with a number of provisions meant to sweeten the pot for the groups. In exchange for the oil industry's neutrality on the bill, for example, sources have previously said the industry would be subject to a so-called
"linked fee" for transportation fuels linked to the price of carbon allowances rather than a hard cap on the transportation sector's emissions, sources familiar with the discussion say. The legislation is also expected to include a title on domestic oil and gas exploration, a key priority for the oil and gas industry.
NYT/Greenwire: Senate Climate Bill's Allocation Fight Expected to Go Down to the Wire - (03/26/10) The senators said that each industrial sector -- electric utilities, petroleum refiners, manufacturers -- will face different emission limits and startup dates. As such, the allocation plan for each also will be different. For transportation fuels, the senators said an idea being offered up by BP America, ConocoPhillips and Shell Oil Co. involves a
"linked fee" that would be tied to the carbon market price for the other industrial sectors. "The money we generate comes from the companies. It's an assessment on what they do in the carbon world," Graham said. "They're creating a carbon product, they're going to pay a fee. Some of it will be passed on. Some of it will be absorbed. But the money we collect from them gets passed back to the consumer, which holds them harmless. Bill Gates may not get it, but most people in my state will. And any money not going back to the consumer from this linked fee has to go to do something the country needs, like retire the debt, or I won't support it."
The Hill: Graham: Carbon fees on gasoline won't hurt consumers -
(03/26/10) "Some of it will be passed on, some of it will be absorbed, but the money we collect from them gets passed back to the consumer, which holds them harmless," Graham said. "Bill Gates may not get it, but most people in my state will, and any money not going back to the consumer from this linked fee has to go to something that the country needs, like retiring the debt, or I won't support it." "If you don't get it, it is going to help your kids," he added. Their proposal is called a
"linked fee." That's because the amount would be tied to the price of emissions allowances in the carbon trading market the bill would establish for utilities and eventually other industrial plants.
Politico: Senators pump gas fee into bill - (03/17/10) They are floating the idea of levying a carbon tax on each gallon of gasoline, which would be passed along to consumers at the pump. The fee would be linked to the market price of carbon emissions bought and traded by utilities and other industries
. "A linked fee to me makes sense," said Sen. Lindsey Graham (R-S.C.), who's working with Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) to craft a climate bill. Graham stressed that he wasn't sure "how far the idea would go" but that it is already picking up support from oil-state members. Sen. Mary Landrieu (D-La.), a vocal opponent of earlier climate bills, has said she's "open" to the new proposal. The three senators plan to release the first draft of their revamped climate bill before lawmakers leave for the congressional recess scheduled for the end of the month.
CQ: Outline of Senate Climate Change Bill Includes Sector-Tailored Regulations -
(03/17/09) Details of Outline According to people attending Wednesday's meeting, the outline circulated by Kerry, Graham and Lieberman to the industry leaders included:
- An economywide cap on carbon emissions that would begin in 2012, with a target of reducing carbon pollution 17 percent by 2020 and 80 percent by 2050;
- A straight fee or tax, paid by consumers at the pump, on transportation fuels. The levy would be linked to the carbon content of the fuel and the price of carbon in the other markets;
- A combination for the regulated sectors of a cap-and-trade model, under which polluters could trade pollution permits on an open market, and a "cap and dividend" model, which would return revenue from the sale of permits directly to consumers;
