I 

111TH CONGRESS 

1ST SESSION H. R. 594 

To amend the Internal Revenue Code of 1986 to reduce emissions of carbon 

dioxide by imposing a tax on primary fossil fuels based on their carbon 

content. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 15, 2009 

Mr. STARK (for himself and Mr. MCDERMOTT) introduced the following bill; 

which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to reduce 

emissions of carbon dioxide by imposing a tax on primary 

fossil fuels based on their carbon content. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Save Our Climate Act 

5 of 2009’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds as follows: 

8 (1) The Intergovernmental Panel on Climate 

9 Change (IPCC) has concluded that human emissions 


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1 of greenhouse gases, particularly carbon dioxide are 

2 responsible for global climate change. 

3 (2) The IPCC has estimated that global tem4 peratures will rise between 3.2–7.2 degrees 

5 Farenheit in the next 100 years if carbon dioxide 

6 emissions are not dramatically reduced. 

7 (3) An increase of even a few degrees could 

8 have major adverse impacts on both the human and 

9 man-made environments, due to rising sea-levels, in10 tensification of weather events, mass extinction of 

11 species, and scarcity of water. 

12 (4) The United States is responsible for nearly 

13 24 percent of the world’s carbon dioxide emissions, 

14 equaling approximately six billion metric tons of car15 bon dioxide per year. 

16 (5) In order to stabilize the earth’s climate and 

17 prevent catastrophic global climate change, the level 

18 of worldwide carbon dioxide emissions need to be re19 duced 80 percent by 2050. 

20 (6) A tax on fossil fuels based on carbon con21 tent will reduce the incentive to burn those fuels, 

22 thereby reducing carbon dioxide emissions. 

23 (7) Revenue collected from a tax on fossil fuels 

24 could be used to decrease taxes on low and middle25 income taxpayers, to fund research and development 


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1 of alternative green energy sources, or to increase 

2 funding for other domestic social priorities. 

3 SEC. 3. IMPOSITION OF CARBON TAX ON PRIMARY FOSSIL 

4 FUELS. 

5 (a) GENERAL RULE.—Chapter 38 of the Internal 

6 Revenue Code of 1986 (relating to environmental taxes) 

7 is amended by adding at the end thereof the following new 

8 subchapter: 

9 ‘‘Subchapter E—Carbon Tax on Primary 

10 Fossil Fuels 

‘‘Sec. 4691. Imposition of tax. 

11 ‘‘SEC. 4691. IMPOSITION OF TAX. 

12 ‘‘(a) GENERAL RULE.—There is hereby imposed a 

13 tax on any taxable fuel sold by the manufacturer, pro14 ducer, or importer thereof. 

15 ‘‘(b) AMOUNT OF TAX.— 

16 ‘‘(1) IN GENERAL.—The amount of tax imposed 

17 by subsection (a) on any taxable fuel shall be an 

18 equivalent amount to $10 per ton of carbon content 

19 in such fuel, as determined by the Secretary in con20 sultation with the Secretary of Energy. 

21 ‘‘(2) ANNUAL INCREASE IN AMOUNT OF TAX.— 

22 For each calendar year beginning after 2009 and 

23 ending with the year after the target attainment 

24 year, paragraph (1) shall be applied by substituting 


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1 for ‘$10’ the following: ‘the amount in effect under 

2 this paragraph for the preceding calendar year, in3 creased by $10,’. 

4 ‘‘(3) RATE FREEZE AFTER TARGET ATTAIN5 MENT.—For the second year after the target attain6 ment year and each year thereafter, the amount in 

7 effect under paragraph (1) shall be the amount in 

8 effect under paragraph (1) for the first year after 

9 the target attainment year. 

10 ‘‘(4) TARGET ATTAINMENT YEAR.—For pur11 poses of paragraph (2), a calendar year is the target 

12 attainment year if the level of carbon dioxide emis13 sions in the United States for the calendar year does 

14 not exceed 20 percent of the level of carbon dioxide 

15 emissions in the United States for calendar year 

16 1990, as determined by the Energy Information Ad17 ministration, Department of Energy. 

18 ‘‘(c) TAXABLE FUEL.—For purposes of this section, 

19 the term ‘taxable fuel’ means— 

20 ‘‘(1) coal (including lignite and peat), 

21 ‘‘(2) petroleum and any petroleum product (as 

22 defined in section 4612(a)(3)), and 

23 ‘‘(3) natural gas, 


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1 which is extracted, manufactured, or produced in the 

2 United States or entered into the United States for con3 sumption, use, or warehousing. 

4 ‘‘(d) OTHER DEFINITIONS.—For purposes of this 

5 section— 

6 ‘‘(1) UNITED STATES.—The term ‘United 

7 States’ has the meaning given such term by section 

8 4612(a)(4). 

9 ‘‘(2) IMPORTER.—The term ‘importer’ means 

10 the person entering the taxable fuel for consumption, 

11 use, or warehousing. 

12 ‘‘(3) TON.—The term ‘ton’ means 2,000 

13 pounds. In the case of any taxable fuel which is a 

14 gas, the term ‘ton’ means the amount of such gas 

15 in cubic feet which is the equivalent of 2,000 pounds 

16 on a molecular weight basis. 

17 ‘‘(e) EXCEPTION.—No tax shall be imposed by sub18 section (a) on the sale or in-kind exchange of any taxable 

19 fuel for deposit in the Strategic Petroleum Reserve estab20 lished under part B of title I of the Energy Policy and 

21 Conservation Act. 

22 ‘‘(f) SPECIAL RULES.— 

23 ‘‘(1) ONLY 1 TAX IMPOSED WITH RESPECT TO

24 ANY PRODUCT.—No tax shall be imposed by sub25 section (a) with respect to a taxable fuel if, with reVerDate Nov 24 2008 00:05 Jan 21, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H594.IH H594

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1 spect to such fuel, the person who would be liable 

2 for such tax establishes that a prior tax imposed by 

3 such subsection has been imposed and no refund or 

4 credit with respect to such tax is allowed under sub5 section (g). 

6 ‘‘(2) FRACTIONAL PART OF TON.—In the case 

7 of a fraction of a ton, the tax imposed by subsection 

8 (a) shall be the same fraction of the amount of such 

9 tax imposed on a whole ton. 

10 ‘‘(3) USE AND CERTAIN EXCHANGES BY MANU11 FACTURER, ETC.— 

12 ‘‘(A) USE TREATED AS SALE.—If any per13 son manufactures, produces, or imports any 

14 taxable fuel and uses such fuel, then such per15 son shall be liable for tax under subsection (a) 

16 in the same manner as if such fuel were sold 

17 by such person. 

18 ‘‘(B) SPECIAL RULES FOR INVENTORY EX19 CHANGES.— 

20 ‘‘(i) IN GENERAL.—Except as pro21 vided in this subparagraph, in any case in 

22 which a manufacturer, producer, or im23 porter of a taxable fuel exchanges such 

24 fuel as part of an inventory exchange with 

25 another person— 


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1 ‘‘(I) such exchange shall not be 

2 treated as a sale, and 

3 ‘‘(II) such other person shall, for 

4 purposes of subsection (a), be treated 

5 as the manufacturer, producer, or im6 porter of such fuel. 

7 ‘‘(ii) REGISTRATION REQUIREMENT.— 

8 Clause (i) shall not apply to any inventory 

9 exchange unless— 

10 ‘‘(I) both parties are registered 

11 with the Secretary as manufacturers, 

12 producers, or importers of taxable 

13 fuels, and 

14 ‘‘(II) the person receiving the 

15 taxable fuel has, at such time as the 

16 Secretary may prescribe, notified the 

17 manufacturer, producer, or importer 

18 of such person’s registration number 

19 and the internal revenue district in 

20 which such person is registered. 

21 ‘‘(iii) INVENTORY EXCHANGE.—For 

22 purposes of this subparagraph, the term 

23 ‘inventory exchange’ means any exchange 

24 in which 2 persons exchange property 


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1 which is, in the hands of each person, 

2 property described in section 1221(a)(1). 

3 ‘‘(g) REFUND OR CREDIT FOR CERTAIN USES.— 

4 ‘‘(1) MANUFACTURE OR PRODUCTION OF AN5 OTHER TAXABLE FUEL.—Under regulations pre6 scribed by the Secretary, if— 

7 ‘‘(A) a tax under subsection (a) was paid 

8 with respect to any taxable fuel, and 

9 ‘‘(B) such fuel was used by any person in 

10 the manufacture or production of any other 

11 substance which is a taxable fuel, 

12 then a credit or refund (without interest) shall be al13 lowed, in the same manner as if it were an overpay14 ment of tax imposed by subsection (a), to such per15 son in an amount equal to the tax so paid. 

16 ‘‘(2) EMBEDDED OR SEQUESTERED CARBON.— 

17 Under regulations prescribed by the Secretary, if— 

18 ‘‘(A) a tax under subsection (a) was paid 

19 with respect to any taxable fuel, 

20 ‘‘(B) a person uses such fuel in the manu21 facture or production of any substance which is 

22 not a taxable fuel, and 

23 ‘‘(C) in the process of such manufacture or 

24 production, carbon in such fuel is embedded or 

25 sequestered, 


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1 then a credit or refund (without interest) shall be al2 lowed to such person in the same manner as if it 

3 were an overpayment of tax imposed by subsection 

4 (a). The amount of such credit or refund shall be an 

5 amount equal to the amount of tax in effect under 

6 subsection (a) with respect to such fuel for the cal7 endar year in which such manufacture or production 

8 occurred, determined on the basis of carbon so em9 bedded or sequestered. 

10 ‘‘(3) LIMITATION.—In any case to which para11 graph (1) or (2) applies, the amount of any such 

12 credit or refund shall not exceed the amount of tax 

13 imposed by subsection (a) on the taxable fuel used 

14 in such manufacture or production (or which would 

15 have been imposed by such subsection on such other 

16 fuel but for subsection (h)). 

17 ‘‘(h) EXEMPTION FOR EXPORTS OF TAXABLE

18 FUELS.— 

19 ‘‘(1) TAX-FREE SALES.— 

20 ‘‘(A) IN GENERAL.—No tax shall be im21 posed by subsection (a) on the sale by the man22 ufacturer or producer of any taxable fuel for ex23 port or for resale by the purchaser to a second 

24 purchaser for export. 


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1 ‘‘(B) PROOF OF EXPORT REQUIRED.— 

2 Rules similar to the rules of section 4221(b) 

3 shall apply for purposes of subparagraph (A). 

4 ‘‘(2) CREDIT OR REFUND WHERE TAX PAID.— 

5 ‘‘(A) IN GENERAL.—Except as provided in 

6 subparagraph (B), if— 

7 ‘‘(i) tax under subsection (a) was paid 

8 with respect to any taxable fuel, and 

9 ‘‘(ii)(I) such fuel was exported by any 

10 person, or 

11 ‘‘(II) such fuel was used as a material 

12 in the manufacture or production of a tax13 able fuel which was exported by any person 

14 and which, at the time of export, was a 

15 taxable fuel, 

16 credit or refund (without interest) of such tax 

17 shall be allowed or made to the person who paid 

18 such tax. 

19 ‘‘(B) CONDITION TO ALLOWANCE.—No 

20 credit or refund shall be allowed or made under 

21 subparagraph (A) unless the person who paid 

22 the tax establishes that he— 

23 ‘‘(i) has repaid or agreed to repay the 

24 amount of the tax to the person who ex25 ported the taxable fuel, or 


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1 ‘‘(ii) has obtained the written consent 

2 of such exporter to the allowance of the 

3 credit or the making of the refund. 

4 ‘‘(C) REFUNDS DIRECTLY TO EX5 PORTER.—The Secretary shall provide, in regu6 lations, the circumstances under which a credit 

7 or refund (without interest) of the tax under 

8 subsection (a) shall be allowed or made to the 

9 person who exported the taxable fuel, where— 

10 ‘‘(i) the person who paid the tax 

11 waives his claim to the amount of such 

12 credit or refund, and 

13 ‘‘(ii) the person exporting the taxable 

14 fuel provides such information as the Sec15 retary may require in such regulations. 

16 ‘‘(3) REGULATIONS.—The Secretary shall pre17 scribe such regulations as may be necessary to carry 

18 out the purposes of this subsection.’’. 

19 (b) STUDY.—Not later than 5 years after the date 

20 of the enactment of this Act, and every 5 years thereafter, 

21 the Secretary of the Treasury, in consultation with the 

22 Secretary of Energy, shall conduct a study on the environ23 mental, economic, and revenue impacts regarding the tax 

24 imposed by subchapter E of chapter 38 of the Internal 

25 Revenue Code of 1986 (relating to carbon tax on primary 


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1 fossil fuels). The Secretary shall submit each study to the 

2 Committee on Ways and Means of the House of Rep3 resentatives and the Committee on Finance of the Senate. 

4 (c) CLERICAL AMENDMENT.—The table of sub5 chapters for chapter 38 of such Code is amended by add6 ing at the end thereof the following new item: 

‘‘SUBCHAPTER E. CARBON TAX ON PRIMARY FOSSIL FUELS’’. 

7 (d) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to sales after the date of the enact9 ment of this Act. 

Æ 


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