Carbon dividend a big loser for NM

ROBERT J. Samuelson’s Jan. 23 opinion piece, “Carbon dividend gives optimism on the climate front,” touts carbon dividend programs. A pragmatic assessment suggests this would be an economic disaster for N.M.

Proposed carbon fee plus dividend legislation was introduced in the U.S. House and Senate in 2018: HR7173 and S3791. The proposed legislation establishes a trust to be administered under IRS Subtitle L. Fees on energy producers, initially at $15 per CO2 ton, will accrue to the trust, and dividends will be distributed from the trust to citizens and lawful residents. The IRS will skim 8 percent of collected fees for administration. At 2017 CO2 tonnage levels, the administrative fee amounts to a new collection agency about the size of the present EPA. The Treasury secretary is authorized, but is not required by the legislation, to verify eligibility; so it is most likely fees on N.M. energy producers will pay dividends to ineligible non-citizens.

N.M. energy producers will not operate at a loss. They will recover their bottom line costs by charging higher consumer energy costs at gasoline and diesel pumps, and natural gas and electricity to heat and cool homes and businesses will rise. Any dividend distribution will be offset by higher energy costs.

Tariffs will be imposed on carbon intensive products defined in the legislation to include just about everything useful. To-be-determined tariffs will be imposed by the Treasury secretary in coordination with EPA; and there is no guidance in the legislation regarding Congressional approval or amount of the tariffs.

Dividend distributions are taxable as gross income. The sum of higher energy costs, administrative costs, tariffs and income tax liability make the average taxpayer financially worse off. And there will be less capital and incentive for producers to invest in cleaner and cheaper technologies . ...

For New Mexicans, implementing this legislation is economic suicide. N.M. is one of the most prolific energyproducing states. Because of its low population..., and because of the algorithm for dividend distribution, more than 99 percent of carbon fees confiscated from N.M. energy producers will go to more densely populated areas. N.M. oil and gas production pays on the order of 33 percent of the cost of N.M. government. This legislation truly will strangle the goose that lays the golden eggs. GEORGE WRIGHT Corrales