My Turn: Tax credits vs. carbon tax

  • U.S. Rep. Richard Neal, right, talks with Jon and Jim Schaefer of Berkshire East Mountain Resort at the base lodge in Charlemont. STAFF PHOTO/PAUL FRANZ

Published: 2/14/2021 3:31:51 PM

The Jan. 28, Recorder covered Congressman Richard Neal’s visit to Berkshire East Ski Mountain Resort to meet with Jon and Jim Schaefer, longtime family owners. Theirs is the only ski mountain in the world to run exclusively on renewable energy. Kudos to Berkshire East for reducing its carbon footprint so substantially!

As chair of the House Ways and Means Committee, Neal has been working hard for months on a transportation infrastructure bill that would offer more tax credits for investment in renewable energy projects, create jobs, stimulate the economy, and reduce greenhouse emissions. Neal is right to point out that “the tax system can bring people economically to renewable energy … by providing incentives to move people away from fossil fuels.”

With 27 years on Ways and Means, Chairman Neal is an expert on the subtleties of our hugely complicated federal tax codes. He recognizes how economic incentives, such as tax credits, can influence investment decisions.

We are in the midst of a climate emergency. If we are to avoid the worst effects of climate change, we must cut emissions in half by 2030 and to net-zero by 2050. Not just in the U.S., but in every country on earth. Although cheap fossil fuels provided the energy to make the U.S. the richest country on earth, continuing their use will disrupt the balance of nature on which all life depends.

Tax credits provide incentives to invest in renewable energy, but are limited and skew the market only towards the clean-energy solutions recognized today. For entrepreneurs trying to introduce new solutions to the market, tax credits can get in the way of progress. We need to go deeper. We need a foundational climate policy that underlies tax credits and works throughout the economy.

The Energy Innovation and Carbon Dividend Act was introduced in the House in 2019 as H.R. 763 and in the Senate in 2018 as S. 3791. It would place a steadily rising fee on fossil fuels, starting low but increasing over time. It offers a cost-effective climate policy solution because it sends a powerful price signal, steering businesses and consumers to a low-carbon future.

Three major economic studies all show this policy will reduce emissions by 40 percent in the first 12 years, and improve health and save lives by reducing the pollution Americans breathe. Additionally, the carbon dividend puts money directly into people’s pockets every month to spend as they see fit, helping low and middle-income Americans. The government will not keep any of the fees collected, so the size of the government will not grow.

The Energy Innovation and Carbon Dividend Act, also called “Carbon Cashback,” is supported by economists and scientists as simple, comprehensive and effective. Because it is self-funded, it doesn’t increase the deficit. A policy of Carbon Fee and Dividend will more effectively reduce emissions than tax credits alone.

Importantly, both the House and Senate versions have bipartisan support, essential for a policy to live beyond the next election cycle. For more information, go to energyinnovationact.org.

Richard Prée is the group leader of the Ashfield chapter of Citizens’ Climate Lobby — volunteers building support in Congress for a national bipartisan solution to climate change.


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