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Carbon Tax Bill Heating up in DC Council

A proposed carbon tax, which will be introduced later this month in the DC Council, is designed to reduce carbon emissions, but it a could end up making the District less competitive in the region. 

DC Councilmember Mary Cheh’s bill would impose a $10 fee per metric ton on carbon pollution for DC businesses and residents. The tax would increase annually by $5 per ton until it reaches $100 per ton in 2038.

DC Councilmember Jack Evans, who chairs the Committee on Finance and Revenue, urged the Federal City Council (FC2) and other District businesses opposing the proposed tax to get more involved in fighting the bill.

“If that bill goes forward, every businesses in the District is going to have to pay more money under a carbon tax,” said Evans, in a speech to the FC2 trustees in June. 

Cheh’s draft proposal, unveiled in May, would return 75 percent of the tax’s revenues through rebates to DC residents, regardless of their energy consumption. The remaining 25 percent would be divided between a Green Bank, which will fund renewable energy and green jobs projects, and tax incentives for renewable-energy projects for commercial buildings.

Climate change groups have argued that the proposal needs to be more aggressive to reduce carbon emissions. They argue the tax should be a $20 per ton starting in 2020, and increase $10 per ton annually until it tops out at $150 per ton in 2032. 

A D.C. Policy Center (DCPC) analysis noted that the “costs of a carbon tax imposed on the District businesses and residents only, and not the rest of the metro area, will be especially high. The tax will increase both the cost of goods and services produced in the city and the cost of capital.”

“The primary goal of a carbon tax is to increase the cost of emitting greenhouse gasses and induce people to move away from carbon-intensive energy,” wrote Yesim Sayin Taylor for the DCPC. “The District has no carbon-based energy production or carbon-intensive manufacturing, so the tax will fall largely on buildings.”