Obama May Levy Carbon Tax to Cut U.S. Deficit

Barack Obama may consider introducing a tax on carbon emissions to help cut the U.S. budget deficit after winning a second term as president, according to HSBC Holdings Plc. A tax starting at $20 a metric ton of carbon dioxide equivalent and rising at about 6 percent a year could raise $154 billion by 2021, Nick Robins, an analyst at the bank in London, said today in an e-mailed research note, citing Congressional Research Service estimates. “Applied to the Congressional Budget Office’s 2012 baseline, this would halve the fiscal deficit by 2022,” Robins said. Hurricane Sandy sparked discussion on climate protection in the election after presidential candidates focused on other debates, HSBC said. A continued Republican majority in the U.S. House of Representatives means Obama’s scope for action will be limited, Robins said. Cap-and-trade legislation stalled in the U.S. Senate after narrowly passing the house in 2009. North American discharges fell 1.3 percent last year amid slowing economic growth. In China, the world’s biggest emitter, greenhouse gases from fuel use rose more than 9 percent in 2011, according to BP Plc (BP/) statistics published on June 13. Obama and the U.S. Congress should consider a carbon tax to help meet the government’s looming need for revenue, according to the Center for Climate and Energy Solutions in Arlington, Virginia. “While Sandy’s lessons are still fresh, the president should be clear about the urgency of cutting carbon emissions and strengthening critical infrastructure to protect Americans against the rising costs of climate change,” the group said yesterday in a separate statement...more