"5 Reasons to Embrace Carbon Pricing Today"

From The Hill, a respected online publication with an influential audience:

The ’90s are over: 5 reasons to embrace carbon pricing today | The Hill


Trends from the 1990s have made a resurgence in today’s fashion and pop culture. But one unfortunate development from the 1990s stayed with us all along; that of politicians fearing they’ll be “BTUed,” a play on President Bill Clinton’s proposed 1993 “BTU tax,” which was a close cousin to a price on carbon emissions. 

Democrats in the House voted — some reluctantly — for the tax, which the Senate soundly defeated. Many House Democrats who lost their seat in the 1994 midterms blamed it on their vote for the BTU tax. This political lesson still resonates; just last week 10 Democrats vulnerable to losing seats in November chose to join Republicans in voting “no” on a carbon tax measure.

This political lesson still resonates; avoid forcing congressional votes on divisive issues destined to fail.

But the entrenched view that the United States will never support a carbon price is misguided. Here are five key reasons why now is the time for U.S. politicians to embrace it.

  1. Since the 1990s, many more American voters have experienced the ravages of climate change firsthand. In 2023, the U.S. experienced 28 “billion dollar” natural disasters, many intimately tied to a changing climate; in 1993, there were only five. The preferences of voters in 1993 say little about the preferences of voters in 2024; today, a majority of Americans indicate that they view climate change as a serious threat.
  2. Most of the U.S.’s closest allies have successfully implemented robust carbon pricing regimes since 1993, including the United Kingdom and the European Union. Even large fossil fuel producers like Canada and Australia have carbon prices, and, although smaller in comparison, Mexico just added one. Other countries are also enacting carbon border adjustment mechanisms. This means that many U.S. exporters will soon pay a price for their carbon emissions, but crucially, the U.S. Treasury won’t reap the benefits. If, instead, the U.S. government includes a carbon border adjustment mechanism alongside a carbon price, our less carbon-intensive producers would see a comparative advantage, as pricing carbon emissions will lead to smaller fees for clean production relative to dirtier counterparts. By cooperating with partners abroad, the United States could also help incentivize greater climate policy action abroad, as producers in China, India and elsewhere will have strong market access reasons to reduce emissions. Trade can be a key lever to action in a world where voluntary pledges often fall far short.
  3. The Inflation Reduction Act has paved the way for carbon pricing adoption in the United States. Its investments in clean energy infrastructure and capacity will keep energy bills down, even with a carbon fee, allowing households to substitute clean energy for dirty energy. The act also helps communities negatively impacted by the energy transition. Through the Inflation Reduction Act and other government actions, we are investing heartily in removing carbon. This makes sense, but it’s folly to spend a lot of money removing carbon from the atmosphere while emitting carbon costs nothing.
  4.  The coming fiscal reckoning in 2025 provides a golden opportunity to pursue carbon pricing as part of a grand bargain on tax reform. Fully extending the Trump tax cuts scheduled to expire at the end of next year will cost about $4 trillion; Congress will desperately need new sources of revenue. Our new working paper shows that a carbon price can help meet fiscal goals, particularly if it applies to all fossil fuel production.
  5. Carbon pricing can help the least well-off. This may seem counterintuitive since energy is a greater share of low-income households’ budget and classical estimates of carbon price distribution show modest regressive effects. However, any such impacts can easily be more than countered by changes in tax rates or expansions of the earned income or child tax credits, all of which will be on the table in 2025 tax legislation. And many climate policy alternatives, including Inflation Reduction Act subsidies and regulations and bans, have similar distributional effects that can also be countered through changes in the tax system.

2025 will be a big year for Congress to tackle longstanding fiscal issues and further climate policy efforts. Before this can happen, politicians need to hear timely arguments backed by up-to-date evidence to stifle any fear of being “BTUed” in the present.

Kimberly Clausing is the Eric M. Zolt Professor of Tax Law and Policy at UCLA School of Law. Catherine Wolfram is the William F. Pounds Professor of Energy Economics at the MIT Sloan School of Management.

2 Replies

@Jonathan Marshall

The reason Democrats got in trouble for supporting Clinton's BTU tax is because it was a new tax. It didn't matter what it was for. Voters of the 2020s are just as resistant to a new tax as they were in the 1990s. Biden had to promise no tax increase on folks making less than $400,000 to get elected. The only hope of getting carbon pricing passed is if it is revenue neutral, like a carbon fee and dividend law that would return all the revenue received from the carbon fees back to the people.

Peter Joseph
243 Posts

@Rich Griffn @Jonathan Marshall  I second Jonathan's comment. I attended the League of Conservation Voters' DC summit March 19-20 and posed the question of why there's no carbon pricing in Biden's IRA to White House advisor Ali Zaidi. “You can't pass a tax in an inflationary environment.” We need to keep hammering the salutary impact of the dividend. As Sec. Shultz always told me, “It's not a tax if the government doesn't keep the money.” Repeat after me…

Forum help

Select a question below

CCL Community's Sitewide Forums are an easy and exciting way to interact with other members on CCL Community.  The Sitewide Forums are focused on subjects and areas of general interest to members.  Each forum consists of topics that members have posted, along with replies from other members. Some forums are divided into categories to group similar topics together. 

Any members can post a topic or reply to a topic.

The Sitewide Forums are open to the entire CCL community to create, comment on, and view online discussions.  Posts and comments should address the subject or focus of the selected forum. 

Note: Categories can only be created by community administrators.

Guidelines for posting: (also see general Community Guidelines)

  • Don’t see your question or topic? Post it.
  • Be thoughtful, considerate (nonpartisan) and complete. The more information you supply, the better the better and more engaging the conversation will be. 
  • Feel like cursing? Please don’t.
  • Ask yourself, “Would my topic post reveal sensitive or confidential information?” If so, please don't post!

Flag/report any offending comments, and then move on. In the rare instance of a comment containing a potentially credible threat, escalate that immediately to CCL.

If the Sitewide Forum has no categories, select the "Add Topic" button at the top of topics window. 

If the forum has categories, when you click on "Add Topic," a dropdown list of the categories appears. Select the desired category and then "Add Topic."
In either case this brings up a box to enter both the topic subject and topic text.

If you have questions or wish to add comments on a posted forum topic, open the post and click the blue “Add Reply” button at top. You can also click on the “Reply” link at the bottom of the original topic posting.

This opens a text box. Add your reply. You can also add documents by dragging a file into the text box. Click “Post” at the bottom of the reply window This will add your reply to other replies (if there are any), sorted by oldest on top. 

If, however, you want to reply directly to someone else’s reply, click on the “Reply” link at the bottom of their reply. 

When replying to a topic post or a topic reply it may be helpful to quote the original text, or the part that your reply is referring to. To quote a topic or reply, click on the "Quote" link at bottom of post. 

When you do this the full text of either the post or reply will be pulled into a reply text box. If desired, you can remove parts of the quoted text in order to get the portion you are interested in quoting.

You can subscribe to notifications of new postings from any of the Sitewide Forums or forum categories. To subscribe, select the green “Subscribe” button at the top of the forum. Click on dropdown arrow to select frequency of notification.

If you are already subscribed, the button will display “Unsubscribe.”  Select it to unsubscribe or select the dropdown arrow to modify frequency of notification. 

Note: If you subscribe to a Sitewide Forum, such as "Media Relations" that has categories (such as "LTEs and Op-Eds"), you will also be subscribed to all the categories. If you wish to subscribe to only one or more of the categories, unsubscribe to the parent forum and subscribe individually to desired categories.


If you see a topic post or reply that interests you or that you like, you can click the “Like” icon at the bottom of the topic post or the reply. This lets the poster know that the topic was helpful. It also contributes to the topic’s popularity, which influences where it is listed in the "Popular" forum tab. There are also additional reactions available for members to use. Mouseover the "Like" icon to choose one of these options: Love, Clap, Celebrate, Insightful, or Interesting.

CCL Community Guidelines

  • Discuss, ask and share
  • Be respectful
  • Respect confidentiality
  • Protect privacy

More guidelines

CCL Blog Policy Area Categories