Event Recap

Post-pandemic inflation and a ban on Russian oil pushed U.S. gasoline prices to near-record highs this spring. At the same time, the Russian crisis has underscored the need to transition away from fossil fuels, which—in addition to fueling climate change—make the United States dependent on an erratic global oil market. Could now be the time for a price on carbon?

Carbon pricing has received considerable bipartisan pushback, with some conservatives arguing it will raise energy costs and some progressives saying it could exacerbate socioeconomic inequalities. But the idea has also gained supporters from both political parties, with Democrats and Republicans mulling the idea as recently as last fall. Economists, meanwhile, are largely united in their belief that carbon pricing is the key to transitioning to a low-carbon future by changing behaviors and incentivizing innovation.

On April 27, EPIC hosted a deep dive conversation on carbon pricing, and how a policy could be structured to help consumers, the climate and energy security. The event included bp’s head of state government affairs and third-party advocacy, Phil Cochrane, as well as EPIC Policy Fellows Heather McTeer Toney, a former regional administrator for the U.S. Environmental Protection Agency, and former Congressman Carlos Curbelo (R-FL).

EPIC Journalism Fellow Lisa Friedman, a climate policy reporter for The New York Times, moderated the discussion and opened by asking Curbelo—who proposed a carbon tax-gas tax swap bill when he was in Congress—why he supports a carbon tax.

“To me, it’s a very honest and transparent way of recognizing that there is a cost to pollution and carbon emissions,” said Curbelo. “And we’re already seeing what the cost is in south Florida. We’ve had cities and counties that have had to elevate roads, install sophisticated pump systems to deal with tidal flooding. So, it’s real. It’s not a theory. We’re already experiencing it. And so, all a carbon tax does is say, okay, this is what we estimate the cost of this is. Let’s take it into account. Let’s raise this revenue because we need it to offset the problems it’s causing.”

Heather McTeer Toney, who is now the vice president of community engagement for the Environmental Defense Fund—an organization that supports a carbon tax—looks at it from the perspective of communities of color and low-income communities. These communities are often on the frontlines of climate change and environmental pollution. They have borne the brunt of pollution for decades, she said.

But many of these communities are also home to the facilities that might be penalized by the carbon price—with impacts that would reverberate throughout the community. To get ahead of this, Toney suggests that communities should be part of the policymaking process from the start.

Toney also said that carbon pricing should be paired with other policies: “Carbon taxing is part of the solution. It’s not the only part. And we have to be cognizant of other policies that are aligned with it to ensure that we have equitable outcomes.”

From bp’s perspective, carbon pricing provides “the most fair, efficient and frankly the easiest way for the economy to come to the solutions that we need,” said Cochrane. “It’s about people in the economy. It’s about our consumers making choices because there’s a price attached to it. They’ll make decisions about the type of transportation they want because there’s a price attached to it that accounts for carbon. The same for home heating. The same for the electricity they consume. We think it does the things that help set the stage that allows our country to transition, frankly the world to transition.”

Friedman raised that the Build Back Better Act, which included a portion of the Biden administration’s climate agenda, is still sitting with the Senate. Despite this, all of the panelists showed signs of optimism about climate policy, citing the climate provisions within the bipartisan infrastructure bill (which passed last year) and a possible new effort to form a climate bill out of some of the Build Back Better Act proposals. A change in tone from industry, with the American Petroleum Institute floating a carbon tax proposal recently, also was indication of  progress, they said.

“There’s this idea that nothing is being done or that nothing has happened, and that’s just not true,” Curbelo said. “Take us back to 2009, 2010, when cap-and-trade failed. Obviously, Republicans were nowhere to be found. Senate Democrats refused to even hear the legislation. We have come so far…The world has changed in a policy sense in a very positive way. Now, the actual policy itself is lagging, but it’s getting better every time.”

Toney pointed out that when it comes to carbon taxing there is clearly a communications problem, and a political problem, but there is also a problem of “how are we calculating it?”

“I hope we’re able to really work on identifying the different indicators that maybe we see differently here, because that is part of that market driver that encourages the action to come from a business and a community perspective,” Toney said. “If the business and community world, the philanthropy world, are aligned, it will shift and change policy. But we have to be on the same page around what needs to be counted. How is it counted? Who is it investing in? How long are we expecting it to take to see a return on that investment? Where are the issues that we don’t have trust on? How do we remove those barriers?”

Friedman ended by asking, “Is now the time for a price on carbon?”

“Yes, now is the time,” said Cochrane, from bp, “And it’s incumbent on industry and business to put their shoulder into it, like what we’re doing as a company…We can’t just blame the politicians for not acting if we’re not telling the politicians what it is we want as a society, what we want as businesses. So, we have to bring our voices to help move it along.”

Curbelo said it is well past time for a carbon price, “because we’ve been paying for it for a very long time.”

But, he cautioned, “Remember that government in a democracy, especially our government the way it’s set, is not about passing the best policy,” Curbelo said. “It’s not about passing the most popular policy. It’s the art of the possible. It’s about passing whatever you can get enough votes for and understanding that and accepting it makes us more effective advocates. Because rather than dismissing people or trying to shame people, we actually understand them. And we start trying to persuade them. And that’s the way to get to 60 votes or 51 votes, whatever it is you need.”

Toney believes a carbon price is one of the tools we need to consider.

“We cannot afford to exclude any solution because we believe the climate crisis right now demands it. It demands us looking at every possible tool and resource that we have at our disposal to meet this crisis,” she said, “Each of us in this room, and beyond, has an ability and a responsibility to be a part of that.”

Areas of Focus: Climate Change
Climate Change
Climate change is an urgent global challenge. EPIC research is helping to assess its impacts, quantify its costs, and identify an efficient set of policies to reduce emissions and adapt...
Climate Law & Policy
Climate Law & Policy
As countries around the world implement policies to confront climate change, EPIC research is calculating which policies will have the most impact for the least cost.
Energy Markets
Energy Markets
Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.
Fossil Fuels
Fossil Fuels
Under current policies, fossil fuels will play an important role in the energy system for the foreseeable future. EPIC research is exploring the costs and benefits of these fuels as...