OREANDA-NEWS. Two US Senate Democrats have reintroduced legislation to place a carbon fee on upstream fossil-fuel producers to help reduce greenhouse gas (GHG) emissions by about 40pc by 2025.

The bill by senators Sheldon Whitehouse (D-Rhode Island) and Brian Schatz (D-Hawaii) would set the tax at \$45/short ton of CO2 emissions beginning in 2016 and would increase by 2pc/yr plus the annual inflation rate. The senators introduced the bill on 10 June.

The pair offered a similar bill last year that started with a fee of \$42/st. The higher starting point in the new proposal was just "a natural progression" after a year and due to inflation, Whitehouse told reporters after he and Schatz unveiled the bill at the American Enterprise Institute, a conservative think tank in Washington, DC.

The senators based the \$45/st fee on the "midpoint" of social cost of carbon estimates issued by the White House Office of Management and Budget (OMB), Whitehouse said. The social cost of carbon accounts for the potential harm and risk resulting from GHG emissions.

The fee would be assessed on upstream fossil-fuel producers including the coal mining, refining and natural gas producing sectors, as well as importers of fossil fuels. It would also be placed on large emitters of methane, such as coal mines and oil and natural gas production.

Th bill calls for the US Treasury Department, which would collect the carbon fee, to work with the Environmental Protection Agency and the Energy Information Administration to implement a program by 2017 to track and collect data on methane emission leaks and issue a report a year later with a list of the major sources and the amount of emissions attributed to methane leaks.

Unlike last year's bill, which would have returned all revenues to the public, the new bill would direct the money to four broad purposes. The revenues would help lower certain corporate tax rates from 35pc to 29pc, saving an estimated \$600bn in the first decade. The funds earned would also offset Social Security payroll taxes and be allotted toward benefits for veterans' programs and retirees. Money would also be put toward creating a grant program for states, totaling \$20bn in 2016, to help low-income households and workers in industries affected by the fee.

"West Virginia, for example, could use money to train coal workers for the technology jobs of the future," Whitehouse said.