Graham: Carbon fees on gasoline won’t hurt consumers

Sen. Lindsey Graham (R-S.C.) on Thursday said the carbon fee on gasoline that his brewing climate bill would establish will not drain drivers’ wallets because many people would receive refunds.

Graham – who is crafting an energy and climate bill with Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) – discussed the proposal after the trio met with industry groups in the Capitol, including the U.S. Chamber of Commerce.

Their plan would essentially keep motor fuel greenhouse gas emissions outside of cap-and-trade, and instead assess a fee on oil companies to account for transportation-sector pollution.

Graham said some of the fee would make its way into gasoline prices at the pump, but added that their plan also includes a rebate mechanism.

“Some of it will be passed on, some of it will be absorbed, but the money we collect from them gets passed back to the consumer, which holds them harmless,” Graham said. “Bill Gates may not get it, but most people in my state will, and any money not going back to the consumer from this linked fee has to go to something that the country needs, like retiring the debt, or I won't support it.”

“If you don’t get it, it is going to help your kids,” he added.

Their proposal is called a “linked fee.” That's because the amount would be tied to the price of emissions allowances in the carbon trading market the bill would establish for utilities and eventually other industrial plants.

“The money we generate comes from the companies. It is an assessment on what they do in the carbon world. They are creating a carbon product, they are going to pay a fee,” Graham said.

It’s a version of something that refiners including BP and ConocoPhillips began pressing for last year. They strongly oppose broad cap-and-trade legislation the Hosue approved, which holds them accountable for securing emissions allowances for tailpipe emissions.

Kerry, Graham and Lieberman plan to unveil their broad bill some time in April after the spring recess.