Thanks to the environmental justice movement, we know that big carbon emitters like power plants and oil refineries are disproportionately sited in poor and predominantly people of color communities. EJ pioneers like Robert Bullard and the Environmental Justice Resource Network began documenting this painful truth decades ago, and it continues to animate the EJ and climate justice movements.
So it’s not altogether surprising if, from time to time, concern is voiced that polluting companies will respond to carbon taxes by curbing carbon pollution elsewhere rather than in frontline communities like blighted urban neighborhoods, Appalachian hollows, or Native peoples’ lands. The pioneering climate activist Bill McKibben raised that possibility yesterday in a post on Yale Environment 360:
Environmental justice [in carbon taxing] would also require policies to make sure that carbon pricing doesn’t perpetuate toxic “hot spots” in poor communities as companies look for least-cost ways to deal with the new reality [in which carbon emitters now pay to dump into the atmosphere].
Not for the first time, we wrestled with that scenario overnight. And we have to report that we can’t picture any credible circumstance in which a carbon tax would lead to emissions lock-in in certain communities. Our conclusion arises from the fact that a carbon tax, by its nature, exacts a cost for each and every squandered opportunity to curtail carbon emissions. A company that perpetuated toxic hot spots in poor communities would incur costs that would weaken and might even destroy its bottom line.
Consider an oil company that owns and operates 5 refineries in poor and/or minority communities and 5 in other locales. Under a carbon tax, any change in equipment or procedures that reduces carbon emissions at any of the 10 refineries reduces the company’s carbon tax bill. That makes it virtually certain that all 10 refineries will undergo some change leading to lower emissions.
Without knowing details on the 10 refineries, we can’t predict which changes the tax will stimulate at each, and how much each refinery’s emissions will go down vis-à-vis the others. It’s possible that logistical considerations would push the company to concentrate its reduction effort at its 5 “other” sites. But we can say with virtual certainty that no refinery will add to its emissions on account of the carbon tax.
Think of it this way: Each facility now has an array of potential capital and operating opportunities for reducing emissions. Some don’t “pencil out” today but will as the carbon tax kicks in. But why would emissions-increasing measures be taken up due to the tax, when all of the tax incentive goes in the opposite (emissions-reducing) direction?
Carbon taxing isn’t a zero-sum game. Charging for emissions opens up opportunities to cut emissions everywhere, simultaneously. The choice facing headquarters isn’t to pit potential reductions from Refineries 1-5 against reductions from Refineries 6-10, but to max out on the new opportunities to cut costs presented by the carbon tax by modifying (and possibly shrinking, as demand drops) Refineries 1 through 10.
To repeat: under a carbon tax, every pound or ton of CO2 eliminated from the waste stream yields equal savings. With no cap to game by manipulating emissions, every reduction is rewarded immediately and equally.
The vigilance by environmental-climate justice campaigners against policies that could lock in toxic hot spots can be traced in part to mainstream environmentalists’ push for carbon cap-and-trade legislation a decade ago. The Waxman-Markey bill that passed the House before dying in the Senate would have allowed U.S. polluters “to offshore” some emission cuts (e.g., by booking CO2 reductions from planting tropical tree plantations) instead of cutting their domestic emissions. That loophole was appalling and it tarnished the bill; but offsets have never been included in proposed carbon tax legislation.
For the record, other concerns raised in McKibben’s post weigh heavily here at CTC, including whether and how a carbon fee-and-dividend system would return revenues to “the estimated nearly 12 million undocumented Americans who contribute to the economy.” We agree that undocumented workers should receive a fair share of the revenue proceeds from carbon-taxing, and it’s incumbent on us carbon-tax proponents to come up with an ironclad way to ensure that.
Let’s also acknowledge that the frontline communities that have suffered historically and disproportionately from toxic emissions that invariably “co-pollute” with CO2 deserve to be compensated beyond the universal fee-and-dividend monthly check. But what if a revenue-neutral carbon tax like fee-and-dividend is the only approach with political legs to actually pass Congress sometime down the road? Given that fee-and-dividend is income-progressive (poor households get more in dividend checks than they spend for costlier energy) and will cut emissions across the board, including in frontline communities, doesn’t it merit support from EJ advocates, despite its limitations?
In short, we agree with Bill that “most of the damage from both climate change and air pollution has fallen on poor people, people of color, and Native nations, both in our country and around our world.” But it’s a stretch too far to say that the potential remedy of carbon dividends “come[s] with [an] obvious moral and intellectual flaw.”
To sum up: the carbon-tax “flaw” of locking in carbon hot spots isn’t well-founded. But the flaw of excluding undocumented Americans from the carbon dividends can and should be addressed and fixed.
It may be that the surest way to do that is for members of frontline communities to assume leadership positions in the carbon tax effort. What are the best ways to encourage and make that leadership possible?
peter joseph says
“We agree that undocumented workers should receive a fair share of the revenue proceeds from carbon-taxing, and it’s incumbent on us carbon-tax proponents to come up with an ironclad way to ensure that.” Really? I can’t imagine Congress creating a carbon tax bill that sends checks to undocumented residents. Clinging to that requirement could be the kiss of death. Can we please be realistic?
Charles Komanoff says
My call was for a “fair share,” which may or may not require dividend checks. But let me turn around your question: Ignoring the claims to and need for at least some revenue compensation for undocumented residents may be the kiss of death to bringing progressives within the carbon-tax movement. Please respond?
Rick Knight says
For the record, the current position of CCL is that anyone with a Social Security Number OR an Individual Tax Identification Number (ITIN) would be eligible for a dividend. Currently about 3 million undocumented workers have an ITIN, which allows them to comply with tax laws. Of course, this is a CCL position and would have to be adopted by the sponsors of a fee-and-dividend bill in order to become part of the legislation. But it does provide one way to bring undocumented workers into the system.
Thad Curtz says
Washington State’s revenue neutral carbon tax initiative, I-732, includes an iron-clad way to return revenue to everybody affected by the carbon tax. It cuts the sales tax 1%. We’re voting on it this November. (You can see more details at yeson732.org)
Rick Knight says
I would also like the point out the importance of a RISING carbon tax, preferably with no $/ton ceiling but rather an emissions ceiling. This will make it overwhelmingly unlikely that an emitter would neglect reducing emissions from any particular facility for very long. Of course, it’s also worth noting that the reason emissions are high in disadvantaged communities is not because of evil intent by utilities or manufacturers to locate their plants in those communities, but rather because those facilities once offered plentiful jobs around which the communities grew. Now that many of those jobs have been eliminated because of technology advances, even that benefit has largely disappeared. So closing down dirty plants and factories in poor communities is not quite enough; it’s also vital to rebuild that job base by making sure the job opportunities for the technologies of the future don’t all end up in the exurbs.
Bob Donough says
You make the point that emission reductions will be made more or less uniformly. That may well be correct. However, your analysis seems to assume that a carbon fee will be applied when the GHG emissions are released. Under the Citizens’ Climate Lobby (CCL) plan, the fee is applied at the point at which the fossil fuels and other greenhouse gasses first enter the economy, that is, imposed upstream at the mine, well or port of entry. This simplifies the fee collection process by reducing the number of points at which the fee must be collected.
In your example, refineries would not likely pay the fee as they are not an initial point of entry. In that case the fee would have already been paid by the company that imported or extracted the raw material used by the refinery – oil. Of course, this could be the same company, but reducing CO2 emissions at the refinery would not reduce the company’s carbon fee expenses.
Legislation could include rebates for reductions in GHG emissions, but it isn’t clear that meaningful CO2 reductions are possible. It also introduces unnecessary layers of complexity. For example, government agencies would be charged with verifying the amount of CO2 removed and whether it had been disposed of safely. Continuing to produce fossil fuels and then attempting to remove the GHG emissions is a dead end.
In the example, in response to decreases gasoline use brought about increasing prices, the company would be forced to close one or more of its refineries. Here McKibben may have a point. Which plants do they close first?
Chris Chidsey says
Bob, you miss Charles’ point. With more expensive oil, refiners will make improvements in the efficiency of their equipment that weren’t cost effective with cheaper oil. I’d go further than Charles and argue that many of the refineries with the oldest, least efficient equipment may well be in poorer communities. These are the ones most likely to be upgraded, with the result of not only less carbon emission per unit of economic activity, but also less toxic emissions of other sorts, and with new local employment opportunities during the upgrades.