California Senate President pro tempore Darrell Steinberg proposed a carbon tax on fossil transportation fuels to replace the coming cap and trade mandate on that sector in 2015. Under Steinberg’s proposal, the price of carbon fuel would rise steadily, starting at an estimated 15¢/gallon in the first year. In 2020, the tax is estimated at 24¢/gallon—lower than the upward price risk under cap and trade at 40¢/gallon. In 2029, the carbon tax on gasoline would pass the upward price risk of cap and trade, Steinberg said.
In his address to the Sacramento Press Club, Senate leader Steinberg (D – Sacramento) outlined the four principles of his proposal:
Set aggressive targets in statute beyond 2020 to reinforce the climate goals of AB32 through 2030 and 2050.
Continue Cap and Trade for industrial plants but replace Cap and Trade’s current 2015 expansion into the transportation sector with a broader, more stable and more flexible Carbon Tax of a similar amount on these same fuels.
Return two-thirds of the Carbon Tax revenues to poor and middle-income Californians through a state Earned Income Tax Credit for families making less than $75,000 per year.
Inject the remaining Carbon Tax revenues into a multi-billion dollar 21st Century development of California’s mass transit infrastructure to reduce traffic and pollution from cars using fossil fuels.
Under either a Carbon Tax or Cap and Trade applied to fuel, consumers will pay more at the pump. That’s necessary. Higher prices discourage demand. If carbon pricing doesn’t sting, we won’t change our habits. On the issue of how this requirement is achieved, we have a choice: and I believe a carbon tax is a better choice than Cap and Trade for fuels.
Under Cap and Trade, no one can tell us whether fuels will trade at 10 cents or 40 cents a gallon in 2015, at any given time and without warning. A carbon tax is stable. A carbon tax is significantly less vulnerable to gaming. A carbon tax is transparent.
… For climate policy to work, it has to sting. I am concerned about who we sting. I say we return the majority of the money to the people who can least afford to foot the bill and who are already suffering most from climate change. My carbon tax proposal will be used to alleviate the financial burden of carbon pricing among low- and middle-income families.—Darrell Steinberg