Carbon Shelters: Carbon Accounting as Tax Law

This Article provides the first comprehensive account of the reconstruction of energy tax law that has occurred in the 2020s. In the past, federal energy policy offered carrots and sticks aimed selectively at specific sources of emissions (e.g., power plants) and specific green alternatives (e.g., solar and wind), even as academics urged the use of universal sticks like a carbon tax. But Congress has now charted a new path: performance-based carrots, or tax credits for any zero-emission energy technology (subject to certain politically driven exclusions). The only way to implement universal, performance-based carrots is to estimate the carbon intensity of every subsidy applicant. This is the task of carbon accounting. The Article makes two main arguments about the emergence of carbon accounting inside tax law.