DATE: January 11, 2021

AGENDA ITEM # 3

TO: Environmental Commission

FROM: Emiko Ancheta, Staff Liaison

SUBJECT: Carbon Dividend Trust Fund Legislation HR 763

RECOMMENDATION:

Discuss information received on H.R. 763

BACKGROUND

The Carbon Dividend Trust Fund Legislation HR 763 bill imposes a fee on the carbon content of fuels, including crude oil, , , or any other product derived from those fuels that will be used so as to emit greenhouse gases into the atmosphere. The fee is imposed on the producers or importers of the fuels and is equal to the content of the fuel multiplied by the carbon fee rate. The rate would begin at a specified amount and increase each year, in addition it would be subject to further adjustments that would be based on progress of meeting a specified emission reduction target. The bill also includes a fee on fluorinated greenhouse gases.

The bill includes specific exemptions, for example: fuels used for agricultural and fuels used by the Armed Forces, along with rebates for facilities that capture and sequester carbon dioxide, and border adjustment provisions that require certain fees or refunds for carbon-intensive products that are exported or imported.

The bill also suspends certain regulations that limit . The suspensions would expire if the emissions targets established by this bill are not reached after a specified time period.

DISCUSSION Review and discuss information received on H.R. 763.

Attachments: A. Carbon Fee and Dividend Email B. H.R. 763 Link C. Statement from the Center for Biological Diversity D. Statement from the American Lung Association

ATTACHMENT A

From: Rahul Patel To: Emiko Ancheta Subject: carbon fee and dividend Date: Sunday, October 18, 2020 2:22:27 PM

Hi Emiko,

My name is Rahul Patel, and I'm a Los Altos resident deeply concerned about . I appreciate the great environmental work our city is doing, including passing the new reach code for all electric buildings. Thank you for your work.

I am also a member of Citizens' Climate Lobby (CCL)'s local Silicon Valley North chapter. CCL is a nationwide non-profit organization with 180,000 members, some of whom live right here in Los Altos. As an organization, our goal is the passage of carbon fee and dividend legislation at the national level, particularly the bill H.R. 763. This bill imposes a fee on carbon at the point of extraction or import and pays the proceeds of the fee as dividends to the American people. It's an approach that de-incentivizes burning of fossil fuels while supporting people, and it's backed by many economic and policy experts.

In looking to support this bill nationally, we are seeking the local endorsement of the Los Altos city council for this bill. Local endorsements of ideas our constituents support can help spur national action. In fact, the city council endorsed the idea of a carbon fee and dividend in 2016, and Anna Eshoo is a co-sponsor of the bill in Congress. Many local governments in California and across the nation have endorsed the bill. We are seeking a new, current endorsement of H.R.763 by the Los Altos City Council.

In seeking this endorsement, I wanted to reach out to you regarding how we can meet with the Los Altos Environmental Commission to discuss this in more detail, and eventually bring this in front of the city council itself. Please let me know about setting up a meeting with the Commission, and any other thoughts you have.

Thank you so much, Rahul Patel 1 ATTACHMENT C

For Immediate Release, January 25, 2019

Contact: Brett Hartl

Carbon Dividend Bill in House Would Gut Clean Air Act Authority to Stop Climate Change

WASHINGTON— Legislation introduced Thursday by Rep. (D-Fla.) and Rep. (R-Fla.) would eliminate the Environmental Protection Agency’s ability to regulate and address greenhouse gas emissions from power plants and mobile sources like cars, trains and airplanes in exchange for a carbon dividend fee on fossil fuels. The legislation would prohibit the EPA from establishing binding Clean Air Act standards or regulation for at least 10 years.

“We don’t have a decade to cross our fingers and hope a huge giveaway to companies gets us out of the ,” said Brett Hartl, government affairs director at the Center for Biological Diversity. “It makes no sense to gut the world’s most successful pollution-reduction program in favor of the myth that deregulation will solve this problem. Crippling the Clean Air Act will only give us climate disaster.”

The “Energy Innovation and Carbon Dividend Act” would place a $15 fee on every metric ton of carbon, which would rise by $10 per year until emissions targets are met, with most revenue returned to individuals and households in the form of a dividend.

The landmark 2007 Supreme Court ruling in Massachusetts v. EPA held that the EPA could regulate greenhouse gas emissions under the Clean Air Act if the agency found that they endanger public health or welfare. Following the Obama administration’s 2009 determination that greenhouse gases did in fact endanger the public, the EPA enacted a suite of protective measures to address greenhouse gas emissions from new and existing power plants, as well as some mobile sources.

Under the “Energy Innovation and Carbon Dividend Act” all of these efforts would effectively be repealed, and the EPA would lose nearly all authority to address climate change.

“Setting a price on carbon that truly changes behavior is a potentially valuable tool in the fight against climate change but you can’t throw out the rest of the toolbox,” said Hartl. “A low carbon fee by itself won’t work, and discarding the Clean Air Act to make this seem politically palatable is just folly.”

The Center for Biological Diversity is a national, nonprofit conservation organization with more than 1.4 million members and online activists dedicated to the protection of endangered species and wild places. 2 ATTACHMENT C

More press releases ATTACHMENT D

Resource for Health Organizations: Protecting EPA Clean Air Act Authority in Climate Legislation

The need to act on climate change and avoid the worst health impacts is more urgent than ever. The good news is that many members of Congress are discussing, drafting and introducing legislation to reduce emissions. The bad news is that polluting industries want to seize this opportunity to include dangerous provisions that would permanently roll back clean air and climate protections and weaken the Clean Air Act.

The Clean Air Act gives the U.S. Environmental Protection Agency (EPA) the authority and responsibility to reduce the emissions that cause climate change because of the threat they pose to human health. Congress must also act to address climate change, but must not do so at the expense of EPA’s ability to protect public health. We need all the tools in our toolbox to solve climate change and prevent the growing health risks it poses.

The health and medical community must be on guard to ensure that these attacks on clean air don’t become law. Below is an overview of two current policy proposals opposed by national public health and medical organizations.

Climate Leadership Council Plan (also known as the Baker Shultz Plan)

The so-called Climate Leadership Council counts among its founding members several oil companies, including BP, Exxon Mobil and Shell, and recently received an infusion of $2 million from BP and Shell to support lobbying activities. Their plan has not yet been introduced as a bill in Congress, but they are actively lobbying for it.

Their plan would put a fee on carbon emissions with the goal of reducing these emissions, and return the proceeds to taxpayers. It also includes two unacceptable giveaways that would greatly benefit the oil industry at the expense of public health.

• The Baker Shultz plan calls for the repeal of EPA’s climate change protections, and the removal of EPA’s authority under the Clean Air Act to set limits on carbon pollution and other greenhouse gases, under the guise of “regulatory simplification.” This sweeping rollback of critical clean air and climate safeguards would include EPA’s limits on greenhouse gas emissions from vehicles, one of the most powerful existing tools to reduce emissions causing climate change.

• The Baker Shultz plan would also immunize fossil fuel companies against any liability for damages caused by their contributions to climate change. This would be akin to a law that prevented anyone from suing the tobacco industry for the harms caused by their products – and it is especially egregious given that both industries have actively worked to keep the realities of those harms from informing policy or becoming public.

American Lung Association Last Updated 6/17/19 1 ATTACHMENT D

H.R. 763, the Energy Innovation and Carbon Dividend Act

This bill, introduced this Congress by Reps. Deutch and Rooney in the House, is not being backed by polluting industries the same way as the Baker Shultz Climate Leadership Council proposal. However, it too reflects the influence of polluting interests, in that it includes an unacceptable trade-off that dangerously weakens the Clean Air Act by blocking for at least ten years EPA action to limit carbon pollution from power plants under the Clean Air Act. Because of that provision, leading health and medical organizations strongly oppose the House version of the bill (H.R. 763).

The legislation is strongly supported by Citizens’ Climate Lobby (CCL), an advocacy group that is active across the country. Citizens’ Climate Lobby also supported a Senate version of the bill that was introduced last Congress that did not contain the harmful provision.

H.R. 763 would set fees on carbon emissions to reduce them and would also return the proceeds back to taxpayers. It does not contain the dangerous provision that would make polluting industries immune to liability for climate change damages. However, it does include an unacceptable provision that would put a ten-year moratorium on EPA’s ability to reduce carbon pollution from power plants under the Clean Air Act. After a decade, if the carbon fee was not working as planned to reduce emissions, EPA would then have to regulate carbon emissions once more.

There are several major problems with this approach:

• It would prevent EPA from exercising its authority to limit power sector carbon emissions for the entirety of the time IPCC scientists say we have left to stave off the worst impacts of climate change – even if the tax was not effectively reducing carbon emissions.

• Taxes are especially vulnerable to a legislative procedure in Congress called budget reconciliation, which allows Congress to pass laws with 51 votes instead of the 60-vote threshold typically required in the Senate. If Congress later overturned just the tax portion of the bill altogether, EPA would still be powerless until the ten-year period was up – and it would be too late to avoid the worst effects of climate change.

• Furthermore, by making the Clean Air Act “germane,” this provision paves the way for other, more harmful rollbacks to be included as the bill’s sponsors seek additional co-sponsorship of the bill. As Congress negotiates a bill, it is common for members to request changes. We know that many members of Congress – at the behest of polluters – are pushing for additional concessions in exchange for their support. Their wish lists are long and dangerous, and go far beyond Clean Air Act authority to regulate greenhouse gases. The resulting final legislation would no doubt be far worse than the bill in its current form.

Frequently Asked Questions

Q: How clear is it that EPA has the authority to act to address climate change? A: Crystal clear. The U.S. Supreme Court has ruled that greenhouse gases count as pollutants under the Clean Air Act, and that because they endanger human health, EPA is required by the Clean Air Act to regulate them.

American Lung Association Last Updated 6/17/19 2 ATTACHMENT D

Q: If EPA maintains this authority, won’t companies be at risk of getting regulated twice for the same thing – once by a and again by EPA regulations? A: Under the Clean Air Act, EPA has the responsibility to protect health from harmful air pollution, which includes carbon pollution. This responsibility is not replaced by a carbon tax, but a strong carbon tax may make additional steps unnecessary. First, under a strong carbon tax, sources that have already cleaned up their emissions adequately could be “deemed to comply” with EPA standards. Second, the Clean Air Act provides a suite of tools that help ensure compliance with a strong carbon tax, including the ability for citizens to sue to ensure cleanup. And third, if emissions remain too high under a carbon tax, EPA must use its authority as quickly as possible. The urgency of the climate crisis means we cannot wait 10 years, followed by a study, for EPA to be allowed to use its authority.

Q: What protections from EPA would the provisions in H.R. 763 and the Baker Schultz plan block? A: H.R. 763 would prevent EPA from limiting carbon pollution from power plants, as it did in the Clean Power Plan, for at least ten years. Leaders of the Climate Leadership Council say that their plan would also take away EPA’s ability to set greenhouse gas emissions limits for vehicles – blocking standards now in place that have been enormously successful in reducing emissions. EPA has numerous other rules on the books limiting greenhouse gases and cleaning up the sources that contribute to climate change.

Q: Aren’t these concerns irrelevant given the Trump Administration’s track record on climate change regulations? A: The provision in H.R. 763 would tie EPA’s hands for at least ten years – long into another presidential administration. The Climate Leadership Council’s plans could remove EPA’s authority permanently.

Q: Don’t we have to make some concessions to get bipartisan support for climate action? A: The Clean Air Act reduces pollution and prevents more than 230,000 premature deaths, 230,000 heart attacks and 1.2 million asthma attacks annually. This incredibly successful public health law must not be seen as a “chit” to trade, and health and medical organizations are working hard to defend it. The good news is that there is a growing bipartisan consensus about the need to act on climate change. Now is the time to organize, educate and persuade members of Congress that climate change harms public health and must be an urgent priority. Climate advocates, especially health and medical professionals, should work together to build constituent demand and bolster support for health-protective climate solutions on both sides of the aisle. Trading away Clean Air Act authority is a dangerous way to cut corners at the cost of public health – we must not allow this to happen.

Q: How do you know that H.R. 763 is really going to get worse? A: The American Lung Association has worked to defeat attacks by polluters and their allies in Congress to block, weaken or delay Clean Air Act safeguards for decades. We are proud to say that by working with national and state health and medical organizations, medical professionals, and patients, we have defeated hundreds of legislative attacks on the Clean Air Act – especially since 2010 when the attacks began to escalate. We’ve fought back against multiple, diverse challenges, including these: to strip EPA’s authority to regulate carbon pollution; to limit EPA’s ability to base its air quality standards on health science; to repeal or delay limits on specific categories of polluting sources; to censor sound health science from informing policy decisions; and to weaken the interpretation of decades-old policies. Polluters and their allies in Congress have a long and dangerous wish list that would benefit their bottom line at the expense of human health, and we’ve been fighting these attacks for years. We are very confident that climate legislation is just the latest vehicle they’re using to try and get these attacks on the Clean Air Act signed into law.

American Lung Association Last Updated 6/17/19 3