R45472 — Market-Based Greenhouse Gas Emission Reduction Legislation: 108th Through 118th Congresses

Members of Congress have expressed a range of perspectives regarding climate change issues and the policy options that address greenhouse gas (GHG) emissions. For example, between the 112th Congress and the 118th Congress, Members introduced resolutions in either the House, Senate, or both chambers expressing the view that a carbon tax is not in the economic interests of the United States. During this same time period, a number of Members introduced proposals that would limit GHG emissions through market-based approaches. Market-based approaches that address GHG emissions typically involve either a cap-and-trade system or a carbon tax or emissions fee program. Both approaches would place a price—directly or indirectly—on GHG emissions or their inputs, namely fossil fuels. Both would increase the price of fossil fuels, and both would reduce GHG emissions to some degree. Both would allow covered entities to choose the best way to meet their emission requirements or reduce costs, potentially by using market forces to minimize national costs of emission reductions. Preference between the two approaches ultimately depends on which variable policymakers prefer to precisely control—GHG emissions levels or GHG emissions prices. A primary policy concern with either approach is the economic impacts that may result. Expected energy price increases could have both economy-wide impacts (e.g., on the U.S. gross domestic product) and disproportionate effects on specific industries and particular demographic groups. The degree of these potential effects would depend on a number of factors, including the magnitude, design, and scope of the program and the use of tax or fee revenues or emission allowance values. As the figure below illustrates, between the 108th and 111th Congresses, most of the introduced bills would have established cap-and-trade systems. Between the 112th and 118th Congresses, most of the introduced bills would have established carbon tax or emissions fee programs. The proposals range in the scope of emissions covered from carbon dioxide (CO2) emissions from fossil fuel combustion to multiple GHG emissions from a broader array of sources. In addition, the proposals differ by how, to whom, and for what purpose the fee revenues or allowance value would be applied. Number and Type of Introduced GHG Emission Reduction Bills 108th Congress through 118th Congress / Source: Prepared by CRS. Notes: “Other Approaches” include (1) proposals that did not specify the overall framework but would have authorized EPA to establish a GHG emission reduction program and (2) proposals that combine elements from a cap-and-trade system with price control features in a carbon tax or emissions fee system, sometimes described as hybrid approaches. This report includes a separate table for each Congress, comparing GHG emission reduction legislation by the following characteristics: General framework: the proposed program structure and scope in terms of emissions covered, multiple GHG emissions, or just CO2 emissions. Covered entities/materials: a list of the industries, sectors, or materials that would be subject to the program. Emissions limit or target: the GHG or CO2 emissions target or cap for a specified year. Distribution of allowance value or tax revenue: how emission allowance value or carbon tax or fee revenue would be distributed. Offset and international allowance treatment: the degree to which offsets and international allowances could be used for compliance purposes and the types of offset activities that would qualify. Mechanism to address carbon-intensive imports: a U.S. GHG reduction program may create a competitive disadvantage for some domestic businesses, particularly carbon-intensive, trade-exposed industries. Additional GHG reduction measures: other mechanisms designed to further reduce GHG emissions that are not covered in the central program.

Curated by CRS — every bill listed in this report's relatedMaterials. Edge type cited_in_report, gold confidence.

• HR 8962 — Methane Border Adjustment Mechanism Act · 118th Cong
• HR 6665 — MARKET CHOICE Act · 118th Cong
• HR 6622 — Clean Competition Act · 118th Cong
• HR 5744 — Energy Innovation and Carbon Dividend Act of 2023 · 118th Cong
• S 5107 — America's Clean Future Fund Act · 118th Cong
• S 3422 — Clean Competition Act · 118th Cong
• S 3198 — Foreign Pollution Fee Act of 2023 · 118th Cong
• HRES 1085 — Providing for consideration of the bill (H.R. 1023) to repeal section 134 of the Clean Air Act, rela · 118th Cong