On June 13, 2022, Marc Goldwein of the Committee for a Responsible Federal Budget gave a presentation to attendees of the 2022 Citizens’ Climate Lobby International Conference, held in Washington, DC, on the potential effects of financing climate-related spending from the House-passed Build Back Better Act with a tax on greenhouse gas emissions.

1. CRFB.org

2. CRFB.org
Note: “Lower Emissions” assumes humans stop increasing global emissions of heat-trapping gases by 2040
and then dramatically reduce them through 2100. “Higher Emissions” assumes humans continue
increasing emissions of heat-trapping gases through 2100. Lines represent weighted means of several
model results.
Sources: The Climate Explorer, Climate.gov.
Average Daily Maximum Temperature for the District of Columbia
Global Temperatures are Rising
Historic
1961-1990 Observed Average: 66.6
64
66
68
70
72
74
76
78
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060
2065
2070
2075
2080
2085
2090
2095

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Note: “Alternative Scenario” assumes extension of individual tax cuts in the TCJA, extension of various tax
extenders, maintaining extended funding levels from the Bipartisan Infrastructure Law, and discretionary
spending growing at the rate of GDP.
Sources: Committee for a Responsible Federal Budget, Congressional Budget Office.
Percent of GDP
And So Is Our National Debt
Historic
1950-2022 Historical Average: 46%
0%
100%
200%
300%
400%
500%
600%
700%
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060
2065
2070
2075
2080
2085
2090
2095

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Debt and Climate Are Both Generational Threats
Rising Debt and Rising Temperatures Both:
Stem from activities with clear benefits today (low taxes,
government services, electricity, transportation)
Gradually worsen over time, making it difficult to notice or
attribute changes from year to year
Are beginning to cause disruptions today (drought, inflation)
Will impose the largest pain on the future, mainly on those
too young to vote or not yet born
(There are also differences – climate change is much more
difficult to reverse than rising debt, for example)

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And Both Would Reduce Output
Estimated Effect on GDP in 2050
Weather Patterns
Hurricanes
-1.0%
-2.2%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
Rising Temperatures Rising Debt
Sources: Committee for a Responsible Federal Budget, Congressional Budget Office.

6. CRFB.org
Sources: Committee for a Responsible Federal Budget, Energy Innovation.
Historic and Projected Emissions (millions of metric tons of CO2e)
US Emissions Have Flattened
0
1000
2000
3000
4000
5000
6000
7000
8000
1990 1995 2000 2005 2010 2015 2020 2025 2030
HISTORIC PROJECTED

7. CRFB.org
Sources: Committee for a Responsible Federal Budget, Energy Innovation.
Historic and Projected Emissions (millions of metric tons of CO2e)
But We Need to Cut them ~40% To Meet Paris Goals
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
(Paris Agreement)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1990 1995 2000 2005 2010 2015 2020 2025 2030
HISTORIC PROJECTED
38%
Cut

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We Need Trillions of Deficit Reduction to Fix the Debt
Trillions
Source: Committee for a Responsible Federal Budget, Congressional Budget Office.
$3.5 trillion
$7 trillion
$11 trillion
$0
$2
$4
$6
$8
$10
$12
100% of GDP by 2032 90% of GDP by 2032 80% of GDP by 2032

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9
Energy Innovation Helped Us to Model Some Options
www.EnergyInnovation.org

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Build Back Better Would Reduce Emissions, Cost $550 billion
Note: Chart does not include revenue from methane fee, Superfund fee, or offshore wind leasing.
Sources: Committee for a Responsible Federal Budget, Congressional Budget Office, Joint Committee on Taxation.
Billions
Spending: $235 billion Tax Breaks: $335 billion

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But It Would Still Leave Us Far From Paris
Sources: Committee for a Responsible Federal Budget, Energy Innovation.
Baseline
-17%
Paris Agreement 2030 NDC
3,200
3,600
4,000
4,400
4,800
5,200
5,600
6,000
2018 2020 2022 2024 2026 2028 2030
Emissions Impact of BBB, Carbon Tax, and Combined Scenarios (millions of metric tons of CO2e)

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And Would Require More Taxes, Spending Cuts, or Debt
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032
Sources: Committee for a Responsible Federal Budget, Congressional Budget Office.
Annual Budget Deficit in Billions

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Instead, We Could Pass a Carbon Tax
A Carbon Tax Could:
Appropriately price the “externality” of climate change
Encourage efficient market-driven shifts toward cleaner
consumption and production
Allow us to price imports to promote emissions reductions
abroad, including in China and India
Incentivize the development of new technologies
Raise $1 to $2 trillion over the next decade

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But It Would Still Leave Us Far From Paris
Sources: Committee for a Responsible Federal Budget, Energy Innovation.
Emissions Impact of BBB, Carbon Tax, and Combined Scenarios (millions of metric tons of CO2e)
Baseline
-14%
-21%
Paris Agreement 2030 NDC
3,200
3,600
4,000
4,400
4,800
5,200
5,600
6,000
2018 2020 2022 2024 2026 2028 2030

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And It Could Raise Prices At a Time of High Inflation
Source: Committee for a Responsible Federal Budget, Bureau of Labor Statistics, Bureau of Economic Analysis.
0.4%
1.2%
0.3%
0.3%
0.9%
0.2%
8.3%
6.3%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22
CPI Monthly
PCE Monthly

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But What if We Combined the Two?

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-$550 B
$650 B
$1,550 B
$50 B
$900 B
Build Back Better
$20 Carbon Tax $40 Carbon Tax BBB & $20 Carbon
Tax (1% growth)
BBB & $40 Carbon
Tax (5% growth)
-$1,000
-$500
$0
$500
$1,000
$1,500
$2,000
A Carbon Tax Could Pay for Climate Investments
Note: Positive numbers indicate deficit reduction; negative numbers indicate deficit increase. Non-climate
costs and offsets are not included in this analysis.
Sources: Committee for a Responsible Federal Budget, Energy Innovation, Congressional Budget Office.
Ten-Year Deficit Impact of BBB Climate Provisions, Carbon Tax, and Combined Scenarios (billions)

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Together, They’d Reduce Emissions Significantly
Sources: Committee for a Responsible Federal Budget, Energy Innovation.
Baseline
-17%
-25%
-21%
-30%
Paris Agreement 2030 NDC
3,200
3,600
4,000
4,400
4,800
5,200
5,600
6,000
2018 2020 2022 2024 2026 2028 2030
Emissions Impact of BBB, Carbon Tax, and Combined Scenarios (millions of metric tons of CO2e)

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Sources: Committee for a Responsible Federal Budget, Energy Innovation.
Putting Us in Spitting Distance of Paris
-20%
-34%
-40%
-44%
-50%
-60%
-50%
-40%
-30%
-20%
-10%
0%
Baseline BBB
BBB &
$20 Carbon Tax
BBB &
$40 Carbon Tax Paris
Emissions Impacts of BBB, Carbon Tax, and Combined Scenarios Relative to 2005 levels

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While Raising Substantial New Revenue
Note: Non-climate costs and offsets are not included in this analysis.
Sources: Committee for a Responsible Federal Budget, Energy Innovation, Congressional Budget Office.
Clean energy &
climate resilience
Clean energy & electric
tax credits
Clean fuel & vehicle tax
credits
Other climate &
infrastructure-related tax
benefits
$0
$50
$100
$150
$200
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Cost of BBB Climate Provisions and Projected Revenue from Carbon Taxes (billions)

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Reduce debt by
3%
of GDP
in 2031
Replace Gas Tax
and make HTF
PERMANENTLY
solvent
Issue an ANNUAL rebate
of
$265
per person
Cut the Payroll Tax rate by
1.2
percentage
points
Which Could Be Used for Many Purposes

22. CRFB.org
A Final Summary Table
Note: Positive numbers indicate deficit reduction; negative numbers indicate deficit increase. Non-climate
costs and offsets are not included in this analysis.
Sources: Committee for a Responsible Federal Budget, Energy Innovation, Congressional Budget Office.
Ten-Year Fiscal Impact
Percent Change in
2030 Emissions
Build Back Better Climate Provisions -$550 billon -17%
$20/ton carbon tax (1 percent growth) +$650 billion -14%
$40/ton carbon tax (5 percent growth) +$1.55 trillion -21%
Build Back Better + $20/ton carbon tax +$50 billion -25%
Build Back Better + $40/ton carbon tax +$900 billion -30%
Fiscal and Emissions Impacts of BBB, Carbon Tax, and Combined Scenarios

23. CRFB.org
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