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Why a Carbon Tax Isn’t In Obama’s Climate Change Plan

Evan Juska's picture
The Climate Group
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  • Jun 28, 2013 7:00 pm GMT

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On Tuesday, President Obama outlined his second-term plan to address climate change. It includes a range of executive actions and regulations that will reduce the nation’s greenhouse gas emissions in the coming years.

But one thing it does not include is a carbon tax.

This represents a departure from the President’s previous approach to addressing climate change. Since taking office, he has continually stated his preference for market-based legislation, over government regulations. But after Congress rejected his first two proposals (i.e. cap and trade and a clean energy standard), the President has decided to forgo a third bite at the legislative apple with a carbon tax, in favor of regulations that he can implement himself.

The decision reveals just how difficult the President thinks passing a carbon tax would be. After all, none of his other legislative priorities have an easy road to passage, so why give up on this one?

The answer probably has to do with the nature of the opposition.

Opposition to a carbon tax is coming not only from Republicans, but from Democrats as well. Two non-binding votes taken in March demonstrated that at least 8-13 Democratic Senators oppose a carbon tax. This group is almost the same as the group of Democratic Senators that withheld their support for cap and trade legislation in 2010. 

And in the four cases where a Democrat who did not support cap and trade in 2010 was succeeded by another Democrat, the successors also opposed a carbon tax in 2013 – suggesting that the opposition goes beyond Senators’ personal views, and is rooted in something more structural.

Senate Democrats not supporting carbon price

carbon diagram 1

*Note: Darkest blue represents the same Senator. Lighter blue represents the same Senate seat. Lightest blue represents the same state.

One explanation for this opposition is that these are “fossil-fuel Democrats” (i.e. Democrats representing large fossil fuel producing or consuming states) who want to protect important industries from competitive disadvantages and constituents from higher energy prices.

And this is true to an extent. Eight of the 13 Democrats who oppose a carbon tax represent major fossil fuel states. And some of them, like West Virginia and North Dakota, are both major fossil fuel producers and consumers.

However, this is only part of the story. Five of the 13 Democrats who voted against a carbon tax are not from major fossil fuels states, and 10 of the 18 Democrats who are from major fossil fuel states voted in favor of a carbon tax – suggesting that fossil fuels are not the only factor influencing most of these Senators.

Senate Democrats in major fossil fuel states

diagram 1 democrats fossil fuels

Source: Energy Information Administration
Note: Light blue represents a top 10 ranking among the 50 states.





Another explanation is that these are “red-state” Democrats (i.e. Democrats in states that voted for the Republican nominee in recent Presidential elections), who are worried about the backlash they might get for supporting a carbon tax from their conservative constituents. This does seem to tell the story. Eleven of the 12 Democrats in states that Mitt Romney carried in 2012 voted against a carbon tax – with the one exception being Mark Begich of Alaska.

The only other Democrats to vote against a carbon tax were Mark Warner and Tim Kaine of Virginia – a state that President Obama only carried by 3 percentage points and that voted for the Republican nominee in 2 of the last 4 Presidential elections. On the other hand, no Democratic Senator in a state that President Obama carried by 4 or more percentage points opposes a carbon tax.

Senate Democrats in states that voted for Mitt Romney

senate votes 3



That red-state Democrats account for well more than half of the votes needed to pass a carbon tax in the Senate has important implications for its prospects. If the opposition were purely economic, perhaps a deal could be struck to compensate states that are disproportionately affected by the tax (e.g. like returning tax revenues to fossil fuel states to compensate for higher energy prices). But if the opposition is largely political, as it appears to be, there just isn’t much the President can do to encourage Senators to risk losing their jobs.

Interestingly, in another non-binding vote last March, 10 of these 13 Democrats voted to allow the EPA to regulate greenhouse gasses for the purpose of addressing climate change.

Assuming that they do not actually favor command and control regulations over market-based legislation, the message coming from these Democrats to President Obama seems to be: “If you want to do this, you are going to have to take responsibility for it. Not us.”

So that is what the President is doing. Regulations limiting carbon from power plants are not the best option for reducing emissions. But they are currently the only option that Congress is giving him.

[1] Since cap and trade legislation never went to a vote in 2010, this list is based on “Senate Climate Debate: The 60-Vote Climb” published by Environment and Energy Daily in May 2010, which categorizes Senators based on how they were expected to vote including: “Yes,” “Probably Yes,” “The Fence Sitters,” “Probably No” and “No.”  This list includes all Democratic Senators not expected to vote “Yes.”  Democrats who eventually supported a carbon tax in 2013 have been removed on the assumption that they would have voted “Yes” if the legislation had gone to a vote.  Democrats who have since been succeeded by Republicans have also been removed.

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Tim Havel's picture
Tim Havel on Jun 29, 2013

A carbon tax is a highly regressive tax, unless offset by a “tax and dividend” program, as proposed by Hansen among others. The same is true for a “cap and trade” approach. Why? Because carbon emissions do not increase in proportion to income (let alone wealth), or at least not past a certain, and not very high, income level. The same problem also occurs with increases in energy prices through regulation. But the real difference is that regulations do not (greatly) increase federal revenues and hence provide the option of offsetting the intrinsically regressive nature of such market interventions through dividends of various kinds. As Krugman pointed out today, even regulations can promote spending and hence growth. There are nevertheless better ways, which our ecocidal and econocidal Congress cannot countenance.

John Miller's picture
John Miller on Jun 29, 2013

Why a carbon tax isn’t in the Obama climate change plan may also have something to do with the U.S. Constitution.  The President’s implementation plan is to execute his latest climate policy through executive orders.  I believe the Constitution limits the authority to establish new taxes to Congress.

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