Carbon tax finds unlikely bedfellows on left, right

Climate change is suddenly a hot topic again. The issue is resurfacing in talks about a once-radical idea: a possible carbon tax.

On Tuesday, a conservative think tank held discussions about it while a more liberal think tank released a paper on it. And the Congressional Budget Office issued a 19-page report on the different ways to make a carbon tax less burdensome on lower-income people.

A carbon tax works by making people pay more for using fossil fuels such as coal, oil, and gas that produce heat-trapping carbon dioxide.

The idea was considered so radical that in 2009, when President Obama tried to pass a bill on global warming, that he instead opted for the more moderate approach of capping power-plant emissions and trading credits that allowed utilities to pollute more. That idea, after passing the House, stalled in the Senate in 2010 and has been considered dead since.

Even so, the Obama administration has no plans to push for a carbon tax now, said a White House official who spoke on the condition of anonymity because there are no discussions about the issue.

The whole issue of climate change was virtually absent during the presidential campaign until Hurricane Sandy hit the East Coast. The devastating superstorm — a rarity for the Northeast — and an election that led to Democratic gains have shoved global warming back into the conversation. So has the hunt for answers to a looming budget crisis.

So the carbon-tax idea has been revived by some on both the right and left and is suddenly appearing in newspaper and magazine opinion pieces and in quiet discussions.

“I think the impossible may be moving to the inevitable without ever passing through the probable,” said former Rep. Bob Inglis. The South Carolina Republican lost his seat in 2010 in a primary fight, partly because he declared that global warming exists and needs to be dealt with. Now he heads a new group that advocates a carbon tax, and the idea is endorsed by former Ronald Reagan economic adviser Arthur Laffer.

The right-leaning American Enterprise Institute held an all-day discussion of it Tuesday. At the same time, the Brookings Institution released a “modest carbon tax” proposal that would raise $150 billion a year, with $30 billion annually earmarked for clean-energy investments. Brookings senior policy fellow Mark Muro called it a “perfect storm” of science and politics.

The conservative Competitive Enterprise Institute is so concerned about a carbon tax that on Tuesday it filed a lawsuit seeking access to Treasury Department emails discussing the idea.

There’s no question a carbon tax would stir huge opposition. A tax of $20 per ton of carbon dioxide emissions would add 1 percent or 2 percent to the price of gasoline and electric power, said Mr. Muro of Brookings.

Specialists on all sides of the issue have watched climate proposals fail in the past. Congress is still split and many in the Republican party deny the existence of man-made climate change, despite what scientists say. Congress also on Tuesday blocked the European Union from imposing a tax on American airliners flying to the Continent as part of an effort to reduce greenhouse gases.

Energy industry lobbyist Scott Segal said many utilities will fight a carbon tax. “The conditions are far from ripe for a carbon tax, if for no other reason than a carbon tax is a tax on economic growth.”