October 31, 2014

Budget Implications of Climate Change/ Energy Legislation

  • The national debt has grown significantly in recent years due to rising annual deficits. A deficit occurs in any year the government spends more...

In the weeks ahead, climate change and energy issues are likely to be in the news again. Recently there has been much discussion on Capitol Hill about a potential bipartisan climate change proposal in the Senate. Energy issues were also in the spotlight last week as several senators raised deficit-related concerns about proposals to shift offshore drilling revenue from the Treasury to the states.

While The Concord Coalition has not taken positions on energy and environmental policy issues involved in the debate, the senators' concerns are a timely reminder that many of the proposals raise significant budget issues.

Proposals to auction greenhouse gas emission permits or to lease federal lands for oil and gas drilling would raise significant revenue. According to the Congressional Budget Office (CBO), climate change bills passed by the House and reported by the Senate Environment and Public Works Committee last year would raise nearly $1 trillion over ten years. The Treasury also receives billions of dollars a year from mineral and energy production on federal lands.

Yet few policymakers have seriously considered using climate change revenues for substantial deficit reduction. Lawmakers also continue to consider drilling proposals that would spend revenues currently going into the Treasury.

Policymakers must break the habit of viewing new revenues as little more than new spending opportunities. When nearly a trillion dollars in new revenues may be available, the fiscal challenges facing our nation require deficit reduction to be on the agenda.