White House says Obama is not planning a carbon tax proposal

President Obama has no plans to propose a tax on carbon emissions, a White House official said.

“The Administration has not proposed nor is planning to propose a carbon tax,” the official said.

Imposing a tax on fossil energy sources to curb greenhouse gas emissions faces huge political hurdles. But the idea has nonetheless received increased attention of late, especially as policymakers seek ways to address the deficit.

The concept drew fresh buzz this week when an analyst with banking giant HSBC predicted that Obama might pursue a carbon tax.

“A second Obama Administration could also explore the potential for raising revenues from a carbon tax as part of a wider package of measures to avoid the 
‘fiscal cliff,’ ” said HSBC’s Nick Robins in a Nov. 7 research note, regarding the pending spending cuts and tax increases set to hit in January if Congress fails to reach a deal to prevent them.

Citigroup’s investment research group also raised the possibility that carbon taxes would surface in fiscal cliff talks.

{mosads}“One major fiscal possibility is a new carbon tax, which is likely to garner far more support this time around than at any time in the past and could become an appealing part of an emerging consensus on how to avoid the fiscal cliff,” the bank said in a note, Reuters reported.

Carbon tax proposals from various quarters are not new, but the idea has emerged as a climate policy alternative in the wake of the demise of cap-and-trade legislation in the Senate in 2010.

Interest picked up further with the September release of a Congressional Research Service report that concluded a carbon tax could potentially cut the deficit in half.

E2-Wire has more here on that report, which included an array of caveats about the deficit finding.

Three think tanks and the International Monetary Fund are co-sponsoring a Nov. 13 forum on carbon taxes that’s slated to include remarks by a senior Treasury Department official.