January 30, 2017

Is a Trump Carbon Tax Possible?

By: Marc Z. Goldgrub, Cleantech Law Partners

            A senior White House official claims that Tesla CEO Elon Musk floated the idea of a carbon tax at a White House U.S. business leaders meeting with Trump on Monday, January 23rd. Other executives at the meeting apparently did not lend the idea much support. Outside the meeting though, a range of political and corporate leaders, including President Barack Obama, Vice President Al Gore, Virgin CEO Richard Branson and World Bank President Jim Yong Kim, have supported the idea of a carbon tax as a means of combating climate change.

            Former Exxon Mobil CEO and Secretary of State nominee Rex Tillerson has also voiced support for a carbon tax, though under his watch Exxon lobbied against carbon tax bills in Massachusetts and has generally been a force of climate action obstruction. Nonetheless, Musk tweeted his support for Rex Tillerson’s Secretary of State nomination on January 24th, later defending his position in an interview with Gizmodo by claiming that Tillerson “publicly acknowledged for years that a carbon tax could make sense. There is no better person to push for that to become a reality.” When Gizmodo asked if Musk was skeptical as to whether he, possibly with Tillerson’s support, could convince a commander in chief with a tendency to call climate change a “hoax” to support a carbon tax, Musk replied “[y]ou are missing the point. This is something we need to strive for and the more voices of reason that the President hears, the better. Simply attacking him will achieve nothing. Are you aware of a single case where Trump bowed to protests or media attacks? Better that there are open channels of communication.”

            Musk has a point. If by being friendly he can somehow get Trump and his administration to not stomp the gas pedal on catastrophic climate change, that would be a good thing. Furthermore, Trump has good reason to work with Musk. A functional American carbon tax would make Tesla and its newly-purchased SolarCity subsidiary more competitive against traditional car and energy companies, both in the U.S. and abroad (especially if other countries likewise implement carbon pricing schemes, as several already have). And since Tesla does all its manufacturing in the U.S. - with the astounding Gigafactory in Nevada, and SolarCity’s RiverBend factory in Buffalo, New York – the resulting growth in the company would likely mean more such factories, and a bounty of the kind of American manufacturing jobs Trump champions.

            Congressional support would almost undoubtedly be required to pass a carbon pricing scheme like this, and that would likely be problematic. Under President Obama, most Republicans in Congress opposed the 2009 Waxman-Markey bill that would have instituted a cap and trade scheme in the U.S., but it’s conceivable that if a carbon tax bill were backed by a Republican President, more (if not most) Republicans might back it (8 supported Waxman-Markey). Most Democrats would probably back it as well - if it is legitimate - considering climate hawks like Senators Sanders and Warren are effectively leading the party at this point. The situation in the Senate would be similar, with just a few Republican votes needed if the Democrats are supportive.

            Could this actually happen? Considering Trump seems antagonistic to almost anything that might result in environmental protection, probably not. Though many of us also thought the voters of the electoral college would not pick the host of Celebrity Apprentice to be leader of the free world. And as Musk implied, cynicism will not get us anywhere in this situation: as unlikely as it may be, if Musk sees a possibility of persuading Trump that a carbon tax would be beneficial, perhaps that is something to strive for.  

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