The coal industry could expect a $50/short ton levy on carbon dioxide
emissions from fossil fuels and the oil companies a 50cts/gallon increase in
gasoline taxes if a legislative proposal from Democratic Representative John
Dingle of Michigan was to succeed.

The draft of the legislation was released on Thursday and Dingell is taking
comments.

"My office and I will evaluate the stream of response traffic over the next
couple weeks and see if we should keep it open. We want to give the public
every opportunity to respond, but I don't see this process lasting months. I
fully intend to introduce and move legislation this year," Dingell said in a
statement.

The bill will be submitted this year, a Dingell aide told Platts.

Under the draft proposal, there would be a $50/st tax on carbon emissions from
coal, lignite, peat, natural gas and any petroleum product. The tax would be
phased in over five years, then adjusted for inflation. The 50?/gallon
gasoline tax would be levied on gas, jet fuel and petroleum-based kerosene.
Diesel and some biofuels would be exempt from the tax.

The revenue generated from the carbon tax would go into the following
accounts: Medicare, Social Security, universal healthcare (upon passage),
state children's health insurance programs, conservation, renewable energy
research and development, and low-income home energy assistance programs.

The gas tax revenue would go into the highway trust fund, with 40% to mass
transit and 60% to roads. The jet fuel tax would be put into an airport and
airways trust fund.

The proposal calls for expanding the earned income tax credit to help
lower-income families compensate for the increased taxes on fuels as well as a
reduction in the tax deduction for home mortgage interest on houses larger
than 3,000 square feet.

"In order to reduce greenhouse gases and make the planet safe and healthy for
future generations, it will take a significant investment from all of us,"
Dingell said in the statement. "A fee on carbon emissions requires a tithe
from all citizens and industries, but no one entity will be unfairly leveled
with a devastating burden. More importantly, it provides an incentive for
change in our economy and our way of life."

In order reduce GHG emissions 60% to 80% by 2050 as called for by the
scientific community, Dingell said, a "multi-pronged approach" is needed.
That's why he is proposing a fee on CO2 in addition to the economy-wide
cap-and-trade program.