Komanoff: The Time Has Never Been More Right for a Carbon Tax (U.S. News)
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Komanoff asks: If efficiency hasn’t cut energy use, then what? (Grist)
Komanoff: Senate Bill Death = Win for Climate (The Nation)
Q&A: Charles Komanoff (Mother Jones)
Were the midterms “pretty good for the climate-concerned,” as The Atlantic’s Robinson Meyer said in his election post-mortem? It would seem so, with the 40-seat “blue wave” ushering in Democratic control of the House and an opportunity to restore climate policy and facts to the political agenda. But for carbon taxes in particular? Maybe not so much.
Two contrasting carbon-tax varieties — “revenue-neutral” and “just transition” — were dealt serious beat-downs on Nov. 6. As CTC director Charles Komanoff reported in this space last month, only 20 of the 43 current Republican members of the Climate Solutions Caucus will be returning to Congress next month, an obliteration that dimmed prospects for bipartisan, “fee and dividend” carbon tax legislation. Among the fallen: Caucus-founder Carlos Curbelo (R-FL-25), who lost two percentage points to newcomer Debbie Mucarsel-Powell.
Evidently, the mild climate concern expressed by the vanquished Republicans couldn’t inoculate them from voters determined to put Democrats in charge of the House. In Meyer’s telling, the Climate Solutions Caucus may simply have been inherently unstable. Republicans have to be at least somewhat centrist to want to join the caucus, but the purple districts that might elect centrist Republicans are going to be less secure for Republicans than hard-right districts.
Confounding the obituaries, or perhaps as a last hurrah, the Caucus introduced its first meaningful carbon tax bill in November. As previously reported here, the Energy Innovation and Carbon Dividend Act of 2018 (H.R. 7173), co-sponsored by Reps. Ted Deutch (D-FL-22), Brian Fitzpatrick (R-PA-08), Francis Rooney (R-FL-19), Charlie Crist (D-FL-13) and John Delaney (D-MD-06)), would set an initial tax rate of $15/metric ton, rising briskly by at least $10/tonne annually thereafter. Several weeks later, retiring Sen. Jeff Flake (R-AZ) and returning Sen. Chris Coons (D-DE) introduced an identical bill in the Senate.
At the same time, the similarly aligned Climate Leadership Council is rumored to be building a bipartisan push for its $40/ton “carbon dividend” bill sometime next year. So it may be too early to count out team revenue-neutral.
On the other end of the carbon tax advocacy spectrum, Washington state’s “just-transition”-oriented Initiative 1631, which would have funded a suite of measures for renewable energy, forest protection and worker transition, went down to defeat by a resounding 56%-44%. As a laboratory of democracy, Washington has now performed yeoman service for carbon tax watchers for three years running: the revenue-neutral Initiative 732 was defeated by an even wider margin (59-41) in 2016, and a legislative carbon tax earmarked to fund public schools failed in 2017.
Clearly, no carbon tax faction has yet earned any bragging rights. As reported here, I-1631 had widespread backing from environmental, civil rights and labor organizations, as well as heavy hitters such as Washington Gov. Jay Inslee, Bill Gates and Michael Bloomberg. No matter, that combination proved no match for massive opposition funding bestowed by mostly out-of-state fossil fuel interests, including $12 million from BP, a Climate Leadership Council founding member.
Nevertheless, the midterms are bound to make the overall political environment far more hospitable to climate concerns, as Meyer argues. The question now is how the ascendant Democrats will put their powers to use on climate issues more generally, not just carbon taxes.
Last month, not just the Blue Wave but wildfires, drought and other climate calamities held public attention in much of the U.S. A new generation of activists and incoming Congressmembers began demanding a full-press climate policy agenda that could be enacted once the Trump Administration and its climate-denying allies are put out to pasture.
Hopes were high that House Democrats would use their new position to advance a Green New Deal — the policy rubric prominently advocated by incoming Rep. Alexandria Ocasio-Cortez (D-NY) and the emerging Sunrise Movement (and that from its earliest conceptions has always included carbon taxation or other carbon pricing). Those hopes receded somewhat last week when their caucus formed a select committee on climate headed by Rep. Kathy Castor (D-FL-14), a 12-year member who hasn’t voiced support for a Green New Deal or any other climate policy idea. (There’s no mention of climate on Castor’s Wikipedia page.)
There also appears to be a growing sense that carbon taxes may belong to an older policy playbook from an earlier, more technocratic era. In that period, a carbon tax could be considered a premier policy tool favored by economists and other well-informed advocates across the political spectrum. Now it may need to take its place as one of an array of options on a newly broadened playing field.
If so, we carbon tax advocates will need to expand our horizons in our search for allies. Rather than “staying in our lane” in the climate change arena, we may need to join a broader discussion that includes issues of tax fairness, efficiency and income inequality. A New Yorker magazine profile of the Sunrise Movement this week notes that “like other activist movements of their generation, they see their cause as inseparable from the broader issues of economic and social inequality.”
Rather than just check the boxes on those issues — as carbon tax organizers did dutifully in both the 2016 and 2018 Washington state initiatives — in the new emergent period of progressive ascendancy we may need to commit our energies to these issues as fully as we do for carbon taxes.
Indeed, it may have been precisely the failure to consider the broader social equity context that doomed France’s recent fossil fuel surcharge at the hands of the Yellow Vests — many of whom express climate concern and engagement but reject being made to bear the brunt of wonky policy measures while their economic betters glide by.
It’s a conundrum as old as environmental policy itself — to do its environmental work, a policy has to work economically but be accepted politically. By making common cause with advocates of economic fairness, as embodied in the Green New Deal movement, we carbon tax proponents may ultimately win a more secure position for carbon taxation than we have done to date.
Such a discussion needs to go beyond the polarized internecine debate among carbon tax proponents over whether such a tax should be revenue-neutral or used to fund new initiatives. It will need to extend into considerations of how the tax functions, whom it impacts as compared to other taxes already in use, and the many ways our society raises revenue for public purposes.
In other words, carbon tax advocacy may have to embody a sweeping re-consideration of current tax and fiscal policies, including an examination of whose interests those policies serve.
Andrew Ratzkin, an attorney and co-chair of the Hastings-on-Hudson Conservation Commission in New York’s Westchester County, is author of the report, Case for a New York Carbon Tax.
This post from Oct. 24 was amended on Oct. 25 to add the map and reference to David Roberts’ Vox post on the Trudeau carbon pricing plan.
The government of Prime Minister Justin Trudeau yesterday announced a national carbon pricing plan that it hopes will yield annual CO2 emissions cuts of 50 to 60 million metric tons by 2022, around a 10 percent drop from Canada’s current emissions.
The plan employs a national carbon price benchmark of $20 (Canadian) per metric ton beginning next year, rising by $10/tonne per year to reach $50 in 2022, according to tables published by the Canadian Department of Finance. Factoring in the 9.3 percent lesser weight of a short ton vis-a-vis a metric ton and the 23 percent lesser value of a Canadian dollar vs. a U.S. dollar, the price trajectory in U.S. terms is $14 per (short) ton, rising by $7/ton per year to reach $35 in 2022.
Perhaps the most innovative element of the plan is the “return” of virtually all of the carbon revenues as dividends to households rather than using the monies to pay for tax swaps or green investments. The plan thus embodies the fee-and-dividend idea long espoused by Citizens Climate Lobby and more recently re-branded as carbon dividends by the Climate Leadership Council, the group fronted by retired Republican officials James A. Baker III and George Shultz.
Ottawa’s dividends proposal includes these provisions:
- The dividends, called “climate action incentive payments,” will be provided annually to federal-taxpaying households by the Canada Revenue Agency.
- Residents of small communities and rural areas get a 10 per cent revenue supplement “in recognition of their specific needs” — presumably, higher fuel needs for heating and driving.
- The dividend amounts will vary by province, presumably with individuals and families of high-carbon provinces receiving larger payments.
“Canada needs to cut its greenhouse gas emissions, and the best way to do that is to put a price on carbon pollution,” declared the country’s Department of Finance in a statement yesterday. “Experts, including Nobel Prize winning economists, have made it clear that pollution pricing is the most effective and efficient way to reduce the greenhouse gas emissions that are giving rise to climate change,” said the statement, which added:
Carbon pollution is not free. Canadians see its effects when extreme weather threatens their safety, their health, their communities, and their livelihoods. They pay for it in the form of structural repairs and higher insurance premiums, food prices, health care costs and emergency services. Climate change is expected to cost Canada’s economy $5 billion annually by 2020.
Several Canadian provinces have already implemented carbon pollution pricing, via a tax (British Columbia) or permit systems via cap-and-trade (Quebec, Ontario, most of the Maritime provinces). The fuel levies published this week by the Trudeau government will now undergo a consultation process expected to last at least several months.
Yesterday’s Finance Dept release includes these three “quick facts”:
- Carbon pollution pricing is the most effective and efficient way to reduce the greenhouse gas emissions associated with climate change.
- Carbon pollution pricing delivers economic benefits because it encourages Canadians and businesses to innovate, and to invest in clean technologies and long-term growth opportunities that will position Canada for success in a cleaner and greener global economy.
- Once in place, carbon pollution pricing could cut Canada’s greenhouse gas emissions by 50 to 60 million tonnes [metric tons] in 2022.
Total Canadian CO2 emissions from burning fossil fuels were estimated at 549 million tonnes in 2015, according to an international listing compiled by the Union of Concerned Scientists. Assuming the targeted reductions in the last bullet point above are all CO2, the 50-60 million tonne reduction would amount to 10 percent of those emissions. (U.S. 2015 emissions were estimated at 4,998 million tonnes in the UCS listing, though our figure for that year was 2 percent greater.)
By 2022, annual carbon revenues under the plan could be as much as $27 billion (Canadian) or $21 billion (U.S.), although exemptions for trade-exposed energy-intensive sectors and for aviation fuel used in indigenous communities might reduce those figures.
The plan is a daring gambit for PM Trudeau, as David Roberts of Vox explained in a post today, Canadian Prime Minister Justin Trudeau is betting his reelection on a carbon tax.
The Canadian government’s embrace of household dividends could also provide a shot in the arm for dividends advocates in the U.S., whose credibility has faltered as Congressional Republicans have disdained the supposedly GOP-friendly dividends approach. This morning, Thomas Friedman, a leading champion of bipartisan climate action among U.S. pundits, called on readers of his New York Times column to “vote for a Democrat, canvass for a Democrat, raise money for a Democrat, drive someone else to a voting station to vote for a Democrat” in the midterm elections.
Echoing Friedman’s call, a constituent of Rep. Carlos Curbelo, the Republican Congressmember who broke ranks with his party in July by introducing a carbon-fee-and-dividend bill, told a Times reporter that Curbelo’s climate concern wasn’t enough to win his vote on Nov. 6: “He is unable to overcome the extreme wing of his party. We need to change the team.”
For more information on Canada’s carbon-pricing plan:
David Wallace-Wells, the writer for New York magazine who jolted us last year with his searing climate-change story, The Uninhabitable Earth, has posted a follow-up, UN Says Climate Genocide Is Coming. It’s Actually Worse Than That.
You guessed right, the sequel is about the new IPCC report. We began the week covering the report’s first-time recommendation of a high carbon price to drive emission reductions. We can’t fully do justice to Wallace-Wells’ latest with a summary — it’s too layered for that. To convey a sense of his argument and his urgency, we’re excerpting five key passages (disclosure: some are longer than mere sentences), with comments.
David Wallace-Wells: Barring the arrival of dramatic new carbon-sucking technologies, which are so far from scalability at present that they are best described as fantasies of industrial absolution, it will not be possible to keep warming below two degrees Celsius — the level the new report describes as a climate catastrophe. As a planet, we are coursing along a trajectory that brings us north of four degrees by the end of the century. The IPCC is right that two degrees marks a world of climate catastrophe. Four degrees is twice as bad as that. And that is where we are headed, at present — a climate hell twice as hellish as the one the IPCC says, rightly, we must avoid at all costs. (emphasis added)
Carbon Tax Center: It’s worse than that. The most likely “shape” of the planetary climate-damage curve (or function) is a quadratic. (See graphic, from our June 2017 post, Showing the Cost Side of the Damage Equation in a New Light.) Doubling the temperature rise doesn’t double the damage, it quadruples it. Tripling the rise magnifies the damage nine-fold. The silver lining, if there is one, is that each increment of temperature rise we can prevent through societal action pays back more than proportionately in damage avoidance.
DW-W [this sentence is from his previous passage]: New carbon-sucking technologies … are so far from scalability at present that they are best described as fantasies of industrial absolution.
CTC: We agree.
DW-W: Because the numbers are so small, we tend to trivialize the differences between one degree and two, two degrees and four. Human experience and memory offers no good analogy for how we should think about those thresholds, but with degrees of warming, as with world wars or recurrences of cancer, you don’t want to see even one.
CTC: Goodness, yet another way in which human cognition militates against fully grasping and grappling with climate change. We thought Dale Jamieson’s magnificent 2014 book, Reason in a Dark Time: Why the Struggle Against Climate Change Failed, and What It Means for Our Future, covered all the obstacles to understanding and action: It’s hard to attribute the myriad consequences we see in the world to climate change… Evolution built us to respond to “rapid movements of middle-sized objects,” not to the slow buildup of insensible gases in the atmosphere. And of course, climate change is the world’s largest and most complex “collective action problem,” in which each of us, acting on our own desires, contributes to outcomes we neither desire nor intend. And many more, to which Wallace-Wells has added the new one, above.
DW-W: Nothing in the IPCC report is news … not to the scientific community or to climate activists or even to anyone who’s been a close reader of new research about warming over the last few years. That is what the IPCC does: It does not introduce new findings or even new perspectives, but rather corrals the messy mass of existing, pedigreed scientific research into consensus assessments designed to deliver to the policymakers of the world an absolutely unquestionable account of the state of knowledge.
CTC: That’s helpful to those of us in the trenches. It aids us in seeing why the release of old news — include the lede that limiting the earth’s average temperature rise to 1.5°C is pretty much off the table — was served up by important media as news, period.
DW-W: The IPCC has also, thankfully, offered a practical suggestion, proposing the imposition of a carbon tax many, many times higher than those currently in use or being considered — they propose raising the cost of a ton of carbon possibly as high $5,000 by 2030, a price they suggest may have to grow to $27,000 per ton by 2100. Today, the average price of carbon across 42 major economies is just $8 per ton. The new Nobel laureate in economics, William Nordhaus, made his name by almost inventing the economic study of climate change, and his preferred carbon tax is $40 per ton — which would probably land us at about 3.5 degrees of warming. He considers that grotesque level “optimal.”
CTC: Yesterday we posted the comment by our colleague Thomas Sterner, declaring that Nordhaus’s “choice to label the 3.5°C [temperature rise] as optimal is … unfortunate.” Today we would rather dwell on the brighter side, that the IPCC for the first time called not just for a carbon price but for a high one, as we reported on Monday.
DW-W: A carbon tax is only a spark to action, not action itself.
CTC: Yes … and no. No, because a robust carbon tax will be far more than a mere spark — it will stimulate enormous changes in behavior, investment, decision-making and innovation, all of it toward vastly lessened use of carbon fuels. Yes, because the tax itself doesn’t reduce emissions, rather it instills incentives that will provoke the reductions.
We think the article is well worth reading. Let us hear your take.
As a companion piece to our post earlier this week, IPCC: Not just a carbon price, but a really high one, we reprint a post last week from the University of Gothenburg (Sweden), on the award of the 2018 Economics Nobel Prize to William D Nordhaus, Yale University, New Haven and Paul M Romer, NYU Stern School of Business, New York, USA. We’ve edited it slightly for readability.
These are two very well-deserving winners, according to Thomas Sterner and Ola Olsson, professors at the School of Business, Economics and Law at the University of Gothenburg.
Nordhaus and Romer have developed methods for answering some of the currently most critical and challenging questions of how to create long-term economic growth and global welfare. Thomas Sterner, professor of environmental economics at the School of Business, Economics and Law at the University of Gothenburg described both Nobel Prize winners as pioneers in their fields and likes the combination of them:
Their research generates knowledge about what type of policies should be pursued in order to solve the global climate problem and at the same time give people a decent standard of living. Nordhaus was a pioneer and defined the climate issue as an important research field that he focused on in many fundamental articles in leading journals. In a way, he should have won the Nobel Prize a long time ago.
“Both winners really deserve the prize,” said Ola Olsson, professor of economics at the University of Gothenburg. “They were strong candidates individually, but I suppose the decision to have them split the prize is a bit surprising.”
William D. Nordhaus was one of the first economists to include the climate in economic growth models. His so-called DICE model has become somewhat of an industry standard among both supporters and critics. The model (or the family of models it has led to) has been the centrepiece of intense discussion regarding assumptions, results and recommendations.
And the criticism has not been unfounded. Nordhaus has, despite being a pioneer, downplayed the need for climate measures or has promoted policy that today would appear to pose a great risk to many people, according to Sterner. He does indeed support the idea of climate measures and policy intervention, yet at a mild level with low climate taxes.
In his articles, Nordhaus arrives at scenarios with a rise in temperatures of 3.5°C by the year 2100 (and a continued increase thereafter) as being optimal. Admittedly he discusses several scenarios and as a good scientist has several caveats about unexpected non-linearities etc. The choice to label the 3.5°C as optimal is still unfortunate. This is in stark contrast to the IPCC report that was published today, which advocates attempts to stick to the Paris agenda’s lower goal of 1.5°C rather than 2 °C. So, Nordhaus is not even close to these goals and considers 1.5 degrees totally impossible. About the 2-degree goal, he writes that it will not be possible to achieve “without negative emissions by the middle of this century,” something Nordhaus probably considers to be out of the question.
Paul M. Romer’s model of endogenous economic growth has been central in research ever since his most important article was published in 1990. Romer shows how technological progress can be integrated into the analysis of long-term economic growth. The issues analyzed include how private companies can produce technological ideas despite the fact that these ideas often can be described as so-called public goods that anyone can use.
“Romer’s research complements Nordhaus’s in a very interesting way,” Sterner said, “since he has studied the mechanisms that drive economic growth and that are utilized to improve macroeconomic models like DICE, in which Nordhaus has integrated a climate economics module. Romer emphasizes the importance of endogenous growth that is based on ideas and research. This is precisely the type of research that will be needed to make the technological development more sustainability oriented,” said Sterner.
Olsson added: “Romer’s analysis has had a strong impact on how we view long-term economic growth in developed countries that is driven by technological innovations.”
This page covers — or at least touches on — carbon-tax campaigning and organizing in states other than Washington.
Click here to read about the 2018 Washington carbon-tax initiative I-1631. Click here to learn about the valiant but doomed effort to pass the 2016 Washington state initiative I-732. For an overview of state carbon taxes, click here.
These bulleted links can help you navigate quickly around this page:
- Carbon tax organizing in Oregon
- Carbon tax organizing in New York State
- Carbon tax organizing in Massachusetts
- Carbon tax organizing in Rhode Island
- Carbon tax organizing in Vermont
Carbon tax organizing in Oregon
The Beaver State is the locus of the most detailed examination of a carbon tax for any U.S. state to date. Oregon’s legislature allocated $200,000 to study the effects of a state-wide carbon tax. The result was Carbon Tax and Shift: How to Make it Work for Oregon’s Economy, by economists at Portland State University’s Northwest Economic Research Center, and released in March 2013. The clearly written and gorgeously designed 36-page report examined a tax based on British Columbia’s carbon tax.
Like BC’s, the carbon tax examined for Oregon would be (largely) revenue-neutral: one scenario applied 70% of the tax revenues to cut corporate taxes, 20% to cut personal income taxes, and 10% to reinvest in industrial energy efficiency programs. The other scenario apportioned 50% of the revenues to cut corporate taxes, 25% to cut personal income taxes, and 25% for industrial and residential energy efficiency and transportation infrastructure.
The Oregon tax, starting at $10/ton of CO2 and rising by $10 per year to $60/ton, or roughly twice the level of BC’s tax, would, by 2025, reduce the state’s greenhouse gas emissions by 12-13% below baseline projections and generate over $2 billion a year in revenue, according to the report. The carbon tax outlined in the study became the basis of HB 3252, a bill aimed at establishing a state-wide carbon tax. The grassroots movement to advance the tax was led by Oregon Climate, which spread awareness via canvassing, tabling and lobbying. Oregon Climate also sought to bridge art with climate advocacy, culminating in “Salmon at the Redd,” a community project in which residents created tiles for a mosaic illustrating what they loved about their state.
Unfortunately, the carbon tax campaign was effectively pre-empted by Senate Bill 1547, which in 2016 established a Renewable Portfolio Standard mandating that Oregon utilities ramp up wind and solar facilities to supplement the state’s considerable hydro-electric supplies. Oregon Climate has shifted its focus to a national effort to help other localities advocate for carbon pricing.
Carbon tax organizing in New York
New York should be a strong venue for pursuing a state carbon tax. In October 2012, Superstorm Sandy made a climate-change believer of Gov. Andrew Cuomo. who declared, “[C]limate change is a reality, extreme weather is a reality, it is a reality that we are vulnerable,” after the tidal surge from the storm inundated coastal communities and brought unprecedented devastation to hundreds of miles of shoreline. Moreover, not just coastal residents but upstate citizens politicized by fracking have rallied around the Jacobson-Delucchi “100% Wind, Water and Sunlight” global scenario for NY State, as Jacobson and co-authors propounded in their compelling journal article in Energy Policy.
Two Carbon Tax Center officers — director Charles Komanoff and board chair Alex Matthiessen — outlined the rationale for and distributional impacts of a potential $20/ton (of CO2) NY State carbon tax in a 2013 op-ed for the Huffington Post (cross-posted here). Our draft brief envisions applying the lion’s share of carbon tax revenues to reduce the statewide sales tax rate by a full percentage point — paralleling the sales tax cut in Carbon Washington’s Measure I-732, discussed above. “Leftover” revenues could help fortify the state’s infrastructure to withstand future storms and/or expedite and incentivize homeowners’ and business owners’ installation of photovoltaic electricity generating capacity. Comments on this concise (6-page) draft document are welcome
A NY State carbon tax bill with a more aggressive design was introduced in Sept. 2015 by two Democratic legislators, Assemblyman Kevin Cahill of Dutchess County and Sen. Kevin Parker of Brooklyn. Their bill, A8372 Cahil / S6037 Parker, starts taxing CO2 emissions from coal, oil, natural gas and biofuels at $35 per ton and increases the rate annually by $15/ton, to a ceiling of $185 per ton. The bill proposes returning 60% of revenues to low- and moderate-income households, with the remaining funds used to prepare for climate change, invest in renewable energy, and build transportation infrastructure.
Environmental advocates from around New York State including CTC director Charles Komanoff met at the SUNY New Paltz campus in September, 2015 to discuss climate campaigning and carbon tax organizing. One of the participants, New York League of Conservation Voters Member Andrew Ratzkin, previously outlined the case for a NY State carbon tax in this compelling op-ed in Crain’s New York Business, in July, 2015. In mid-2016 Ratzkin published a lengthy article in the Columbia Journal of Environmental Law, You Say You Want a REV Solution, critiquing the state’s “Reforming the Energy Vision” blueprint as inferior policy to a statewide carbon tax.
Carbon tax organizing in Massachusetts
The bay state’s Global Warming Solution Act of 2008 mandated a 25% reduction of CO2 emissions below 1990 levels by 2020 and an 80% reduction by 2050. Befitting its “promising” status in CTC’s report, Opportunities for Carbon Taxing at the State Level, Massachusetts is a hotbed of advocacy for a statewide comprehensive carbon tax to meet and surpass those targets.
The most politically popular bill appears to be S.1821, An Act combating climate change, sponsored by State Senator Mike Barrett (D-Lexington). Barrett’s nearly identical 2016 bill S.1747 had 47 co-sponsors, and this year he has 64, nearly one-third of the legislature,
The Barrett bill specifies an initial carbon fee of $10/ton of CO2, increasing in $5/ton annual increments to $40/ton, after which the legislature will consider increases or decreases. The bill establishes a fee-and-rebate system, with 100 percent of carbon revenues collected from fossil fuel providers returned pro rata to state residents and to employers based on the number of employees.
S.1821 will direct additional rebates to households in car-dependent areas and to energy-intensive businesses. As with the similar Citizen Climate Lobby fee-and-dividend proposals at the federal level, the rebate system is intended to be income-progressive (with low- and moderate-income households being net beneficiaries while wealthier households would be net payees) while preserving all households’ incentives to reduce fossil fuel use in order to pay less in fees.
Supporters of Barrett’s prior bill, S.1747, cited broad support from businesses including financial services, healthcare, hospitality, food services, transportation, design and technology companies touting its potential to incentivize innovation and preserve competitiveness. At an Oct. 2015 legislative hearing, Business Leaders for Climate Action released an endorsement letter backing the Barrett bill, signed by over one hundred state businesses and business leaders.
On the House side, State Representative Jennifer Benson (D-37th Middlesex) is sponsoring H.1726, “An Act to promote green infrastructure, reduce greenhouse gas emissions, and create jobs.” The Benson bill adheres to the Barrett bill’s carbon-fee-and-rebate model but dedicates 20 percent of revenues to fund green infrastructure directly, such as public transportation, renewable energy, energy efficiency, and protection against the expected impacts of climate change. With 80 percent of revenues applied to rebates rather than 100 percent, the Benson bill would likely have a somewhat less income-progressive outcome than the Barrett bill, though the difference would be attenuated by the green investments.
Two other energy-related bills also include carbon pricing provisions:
- Senator Marc Pacheco (D-Taunton)’s S.479, An Act relative to 2030 and 2040 emissions benchmarks, would authorize the state to “create, expand, or join market-based compliance mechanisms, including but not limited to greenhouse gas emissions trading and carbon pricing programs,” in order to achieve the greenhouse gas emissions reductions required by the Massachusetts Global Warming Solutions Act.
- Solomon Goldstein-Rose (3rd Hampshire)’s HD.1948, An Act relative to creating energy jobs, would establish a carbon-fee-and-rebate system similar to those in the Barrett and Benson bills as part of a larger initiative to make Massachusetts “the Silicon Valley of the new energy economy.”
Analysis by the Massachusetts Department of Energy Resources suggests that carbon pricing would deliver the greatest CO2 reductions of any policy while enhancing state and local employment. Advocates are using those findings, along with the potential to cut health care costs through reduced air pollution, to convince Governor Charley Baker to support carbon pricing legislation.
In Jan. 2017, Dave Anderson of the Massachusetts-based Energy & Policy Institute posted a provocative, well-documented piece, Under Rex Tillerson, ExxonMobil Lobbied Against Carbon Tax Bills. In his article Anderson revealed 2016 lobbying disclosures filed with the Secretary of the Commonwealth of Massachusetts indicating that a lobbyist paid by ExxonMobil opposed the revenue-neutral carbon tax bill S.1747, as well as other climate-related bills.
For more information on carbon pricing in Massachusetts, view this short video on carbon pricing by Business Leaders for Climate Action, or contact email@example.com.
Carbon tax organizing in Rhode Island
With its coastline-defined topography, the Ocean State is directly exposed to climate change impacts of rising sea levels, flooding and storms. Rhode Island is also home to U.S. Senator Sheldon Whitehouse, whose 100 weekly “Time to Wake Up” speeches on the Senate floor in 2013-2015 established him as Capitol Hill’s most forceful voice for climate action. The Senator’s American Opportunity Carbon Fee Act of 2014 would establish a national carbon tax.
With federal carbon pricing blocked by the GOP, a coalition of RI environmental, faith and business groups formed Energize Rhode Island in 2015 to advocate for state carbon pricing legislation. In January 2016 State Rep. Aaron Regunberg (D-Providence) introduced House Bill 7325, along with 40 co-sponsors. H7325 specifies an initial carbon fee of $15/ton of CO2, increasing in $5/ton annual increments. Seventy percent of the revenue would be refunded via per capita and per employee rebates to Rhode Island families and businesses, with 25% invested in renewable energy and efficiency programs.
The Energize Rhode Island Coalition touts a REMI study finding that H7325 will create over a thousand new jobs in the first year alone — a major economic boost for a state whose 2014 population was just 1.055 million — while emission reductions quickly reach double digits. Job growth will continue apace in subsequent years, according to the study, as Rhode Islanders save much of the nearly $4 billion a year they now spend on fossil fuel energy, all of it imported from outside the state.
Carbon tax organizing in Vermont
The conversation among policymakers in Vermont has begun to shift from whether the state should price carbon pollution to how, reports Tom Hughes of VPIRG, in Feb 2016.
The carbon-pricing campaign is led by Energy Independent Vermont, a coalition comprising the state’s top environmental organizations, the renewable-energy leaders who have made Vermont a solar powerhouse, iconic Vermont businesses like Ben & Jerry’s and Seventh Generation, the state’s low-income weatherization agencies, interfaith religious leaders, and academics at U-Vermont’s Gund Center for Ecological Economics. Non-member allies of Energy Independent Vermont include the Vermont Council on Rural Development and a CERES-supported group of industry leaders including Sugarbush Resort, Burton and King Arthur Flour.
The campaign engaged Regional Economic Models, Inc. (REMI) to conduct an analysis of a pollution tax set at $100 per metric ton of CO2, with 90% of revenues recycled as cuts to the state income tax, corporate taxes and a reduction in the sales tax, and the remaining 10% reserved for low-income weatherization and other energy-saving investments. As modeled, the tax would exempt electric generation, since that is already covered with a carbon pricing regime through RGGI, the Regional Greenhouse Gas Initiative. The REMI study concluded that over the first decade this measure would cut carbon emissions from heating and transportation by 31% while generating 2,400 new jobs, raising gross state domestic product by $100 million, and adding more than $150 million a year to real disposable personal income.
Two bills with similar tax rates and revenue treatment were introduced in the Vermont General Assembly in early 2015, according to Hughes. Energy Independent Vermont delivered 25,000 petitions in favor of carbon pricing to Vermont legislators in November 2015, he reports. In January 2016 Gov. Peter Shumlin’s administration called for the state to “investigate and pursue options for market-based greenhouse gas emission policies.” A May 26 piece by Energy Independent Vermont activist Luc Reid in the Williston (VT) Observer, The unsuspected upsides of a carbon pollution tax, did a nice job of laying out the “income progressivity” of EIV’s carbon tax proposal.
The November election win of Republican Lieutenant Governor Phil Scott to the governor’s office will set back efforts to enact a Vermont carbon tax, Seven Days political columnist Terri Hallenbeck reported in early December.
The municipality implemented the United States’ first tax on carbon emissions from electricity, on April 1, 2007, at a level of approximately $7 per ton of carbon dioxide. According to the City of Boulder, the tax was costing the average household about $1.30 per month, with households that use renewable energy receiving an offsetting discount. The city expected the tax to generate about $1 million annually until its expiration in 2012, with the revenues used to fund Boulder’s climate action plan to further reduce energy use. In June 2009, the City Council voted unanimously to raise the tax level. Although the new rate was not originally specified, the expected increase in revenues, some $810,000 annually, suggests that the increase is on the order of 80%, or perhaps $5-$6 per ton of CO2 (on top of the original $7/ton). In 2012, residents voted to continue the tax at the 2009 rate for another five years.
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The 2016 Washington state carbon tax referendum: what happened
In 2015, grassroots advocates in Washington crafted a carbon tax ballot measure that, they hoped, would make theirs the first U.S. state with a carbon tax. Their Initiative 732 would have established a comprehensive statewide carbon tax reaching $25 per metric ton of CO2 in 2018 and rising thereafter at 3.5% faster than the general inflation rate. The initiative was decisively defeated, however, by a vote of 59% to 41%. We discuss I-732 and the divisiveness it spawned, directly below.
Five weeks after that vote, Washington Gov. Jay Inslee proposed a carbon tax whose level — starting in May 2018 at $25 per metric ton of CO2 and increasing thereafter at 3.5% a year faster than inflation — would be identical to that in I-732. The Seattle Times first reported the proposal, which is a key part of the governor’s fiscal plan, on Dec. 13. Inslee’s office has issued an informative 3-page policy brief outlining the intended uses of the carbon tax revenues; unlike I-732, which was designed to be nearly 100 percent revenue-neutral, the governor’s proposal, which requires legislative approval, is intended to patch big holes in the state budget. We hope to report on the progress of Gov. Inslee’s proposal shortly.
On Nov. 12 Carbon Washington, the grassroots advocacy group that gathered 360,000 signatures to put Measure I-732 on the November ballot, and then fought for its passage with a high-energy organizing campaign, issued a statement, Carbon tax friends, be proud of what we’ve accomplished. Here’s the opening paragraph:
Together, we accomplished something historic by putting the nation’s first statewide carbon tax before the voters. We showed that there is a strong desire for common-sense climate action in Washington State, and we influenced the national conversation on climate policy. We ran an honest, transparent, and positive campaign focused on addressing the climate and equity problems facing our society. We did all of that thanks to you.
CarbonWA says it is thinking through next steps and want[s] to hear supporters’ “thoughts on the election and where this movement that you helped build should go next.” The group invites feedback via email. Their terrific Web site, Yes on 732, is still up.
As of Nov. 13, Washington’s Secretary of State was reporting 1,571,080 No votes vs. 1,091,626 Yes, a nearly 3-to-2 margin. Only King County, the state’s largest, which includes Seattle, voted majority Yes; all other 38 counties voted No to Measure 732.
In the aftermath of the election, the Alliance for Jobs and Clean Energy — the Washington confederation that became the locus of “green” opposition to I-732 — posted a five-page draft clean energy plan intended to fulfill its commitment to fashion an alternative policy to Carbon WA’s revenue-neutral carbon tax. The plan’s carbon tax, just $15 per ton of CO2 and with no increase beyond inflation unless as-yet-unspecified reduction targets are met, would be around half of the tax level specified in I-732; most emission reductions would come from investments in efficiency and renewables outlined but not specified in the draft. Alliance leaders pledged to push their plan to the legislature and vowed to put it on the ballot in 2017, if necessary, the Seattle Times reported on Nov. 12.
Top reads on the ballot battle (newest listed first):
The I-732 referendum received intense national as well as local coverage in the run-up to the election, in part because the split over the measure within the green movement made for a compelling (and disturbing story).
The best post-mortem we’ve seen is Marianne Lavelle’s Nov 9 story, Washington State Voters Reject Nation’s First Carbon Tax, for Inside Climate News. It’s an excellent overview of the competing perspectives of I-732 proponents and opponents (state purview vs. national, social-justice vs. economic, etc.) and has quotes from Washington social-justice advocates (who opposed the measure) and climate luminary James Hansen and CTC director Charles Komanoff, who supported it. Here, for example, is a quote from KC Golden, senior adviser to the Washington State nonprofit Climate Solutions:”
The people who came up with the idea of ‘revenue-neutral’ did it for a good reason, to defuse the partisan bomb that keeps us from getting everywhere on climate. But we can’t find any political ‘there’ there. To tell labor and communities of color, ‘We’re going to change the incentives and benefits are going to flow’ sounds…a lot like ‘trickle-down’ economics. They justifiably don’t trust that story.”
Draw your own conclusions.
Here are half-a-dozen other (pre-election) articles:
- The left’s opposition to a carbon tax shows there’s something deeply wrong with the left, (Washington Post editorial, Oct 27). Strongly supported I-732 and decried left-greens’ stance that “softening the blow for the poor and middle class is not enough; the government must divert the revenue according to the wishes of specific interest groups.”
- Opposition to Washington’s historic carbon tax initiative is coming from the unlikeliest of sources (Natasha Gelling in Think Progress, Oct 6). Sophisticated and concise examination of the green split over I-732.
- Initiative 732: A ‘Carbon Tax Swap’ To Address Climate Change (Seattle NPR affiliate KNKX-FM, Oct 3). Excellent account of both sides’ views on I-732.
- The environmental groups killing a carbon tax (“The Hill,” Sept 22). Professor of law and economics Shi-Ling Hsu — a signatory to CTC’s Paris letter last fall — dissected the opposition to I-732 from sectarian green groups.
- Tax carbon polluters, not working families (“Crosscut,” Sept 20). Three veteran organizers explained why the I-732 carbon tax will be just as well as efficient.
- Washington Carbon Tax Ballot Initiative Picks Up Biggest Corroboration Yet (CTC blog, Aug 5). Our quick guide to Sightline Institute’s in-depth analyses backing Carbon-WA’s claims for Measure 732 demonstrating that the carbon tax will be revenue-neutral, income-progressive and climate-effective.
- There’s a cheap, proven fix to the world’s biggest problem (CNN, April 19). Political writer John Sutter interviewed Carbon-WA founder Yoram Bauman and explained why a victory for Yes on 732 could be key to unlocking carbon taxing in the U.S.
Our blog posts on I-732 (newest listed first):
The Carbon Tax Center strongly supported Carbon WA’s initiative and organizing campaign. Our blog posts during the few weeks before the election responded vigorously to attacks on Initiative 732. Earlier-dated posts mostly involved straight reportage about the merits of the initiative and the campaign to pass it.
- Naomi Klein Is Wrong On The Policy That Could Change Everything, Nov. 7, 2016. The policy that could do the most to start changing everything is on the ballot in Washington state, but somehow it’s not quite good enough for the author of “This Changes Everything.”
- To The Left-Green Opponents of I-732: How Does It Feel?, Nov. 4, 2016. The Koch brothers just gave $50K to the “No On 732” forces. If you’re on the left, it’s time to ask yourselves, in Bob Dylan’s words, “Are you having a good time?”
- Fighting in the Trenches Doesn’t Excuse Ignorance on Carbon Taxes, Oct. 28, 2016. We skewer criticisms of I-732 from the advocacy group Food & Water Watch, including their nonsensical claim that “carbon taxes help fossil fuel companies, not the environment.”
- Washington State’s I-732: A Climate Measure for the Society We Have, Oct. 18, 2016. Invokes mid-century humanist radical Paul Goodman to critique “old-guard” green-establishment’s stance opposing Carbon Washington’s ballot initiative.
- The Political Meltdown That Could Save The Climate, Oct. 8, 2016. Why the GOP-Trump electoral meltdown opens a path for I-732 to become the template for a U.S. carbon tax.
- Carbon Tax Can Be a Remedy for Toxic Hot Spots (Sept. 13, 2016). Rebuts notion — left over from the 2009 Waxman-Markey bill built around cap-and-trade with offsets — that a carbon tax could perpetuate or exacerbate tosic “hot spots” in communities of color.
- Washington Carbon Tax Ballot Initiative Picks Up Biggest Corroboration Yet, Aug. 5, 2016. Reports on masterly rebuttal to WA state government’s objections to I-732, from Pacific NW think tank extraordinaire Sightline Institute.
- Feeling The Heat: A Carbon Tax Gains Grassroots Momentum in Washington State, July 16, 2015. CTC’s Matt Gordon captures the on-the-ground energy of Carbon WA’s petition-gathering for Initiative 732.
I-732 history and details (This pre-Nov 2016) content has not been updated.)
The Evergreen State is blessed with abundant natural beauty — Mt. Rainier, the North Cascades, Puget Sound, the Olympic Peninsula and the Columbia River basin and gorge — with an outdoor culture to match. It was also wracked by drought and forest fires in 2015. In that year, carbon tax advocates under the banner of Carbon Washington began organizing for a ballot initiative mandating a state carbon tax. Measure I-732 would have taxed carbon emissions at an initial rate of $15 per ton of CO2, rising the following year to $25 per ton, and then increasing annually by 3.5% more than the inflation rate.
The tax, gracefully summarized last year by the Christian Science Monitor, would have used the expected $1.7 billion in annual revenue to overhaul Washington’s unusually regressive tax code. Most of the money was earmarked to lower the state sales tax from 6.5% to 5.5%. (While the state sales tax is 6.5%, the average combined local-state sales tax rate is 8.89%, the fifth highest in the country.) The annual increases in the carbon tax would have offset the rising value of the sales tax reduction, ensuring the measure stayed revenue-neutral. Another $200 million a year would have funded the state Working Families Rebate – an extension of the federal Earned Income Tax Credit. The Working Families Rebate was created in 2008 but never funded, and revenue from the carbon tax could have assisted 400,000 low-income working families. These two pieces made I-732 the state’s most progressive tax initiative since groceries were exempted from sales taxes in 1977. The remaining funds would have enabled the state to eliminate the business and occupation tax on manufacturing — a feature designed to win business support.
CTC researcher Matt Gordon visited Washington in June 2015 and met with ballot organizers there. He wrote a blog for us about Measure I-732 last July and another in August about backbiting against Measure I-732 by some veteran state environmental advocates. (The surprising opposition to I-732 was criticized by leading right-of-center economist Greg Mankiw in a New York Times opinion piece in early September, 2015, backing the measure.) Despite the opposition, Carbon Washington collected 360,000 petition signatures — over 100,000 more than the 246,000 required to put Measure I-732 on the November, 2016 ballot for a statewide up-or-down vote.
Keibun Mori, a former economist with the Washington State Energy Office, developed a carbon-tax spreadsheet model to predict revenue generation and CO2 reductions for the state from a carbon tax. Keibun’s model used an elasticity-based approach (as does CTC’s national carbon-tax model), and was used to estimate greenhouse-gas emission reductions for the Oregon study noted above.
Carbon Washington’s I-732 website has clear and compelling information, arguments and graphics for Measure I-732, including lead organizer Yoram Bauman’s clarion defense of the measure’s provisions to ensure social and economic justice. Yoram’s New Year’s 2016 update was stirring and informative as well.