EPA doesn’t rule out state carbon tax option for power plants

The Environmental Protection Agency (EPA) isn’t currently ruling out the idea of allowing states to meet planned climate regulations for existing power plants by imposing state-level carbon taxes.

The concept of giving states that option is experiencing a little boomlet. Brookings Institution economist Adele Morris this month pitched it to the EPA, and it has also garnered coverage in The Washington Post, E2-Wire, and The Daily Caller.

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E2-Wire asked the EPA if the rule they’ll propose in draft form next June might give states that option. The EPA declined to address the idea head-on, noting the agency is gathering input from a range of sources to inform the carbon rules for existing plants. Here’s the EPA's full reply:

"EPA is working with public and private sector stakeholders to collect input that will inform the design of a program to reduce carbon pollution before proposing guidelines for existing power plants.  
 
Under section 111(d) EPA establishes guidelines; the states then design programs to fit their particular mix of sources and policies to achieve emission reductions.  When we issue a proposal next June, the formal public process begins-including a public comment period and public hearings-which provides additional opportunities for stakeholder input before final guidelines are issued in June 2015."

Morris, a carbon tax supporter, argues that a carbon excise tax could be part of the “menu of specific approaches” that the agency gives states that will craft plans to meet the federal guidelines. Morris suggests the EPA could "allow states to adopt a specific state-level excise tax or fee on the carbon content of fuels combusted by the power plants regulated under this rule."

She explains the idea here.