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Search Results for: I-732

After The Trump Win

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Was it really just a month ago that the “Access Hollywood” tape was sending the Trump candidacy into its death throes, the Republican Party was melting down, and the first-ever Congressional debate over carbon taxing seemed in store for 2017?

It sure looked like it, as I wrote in this space on October 9:

Democratic control of both the White House and Congress clears a path for a federal carbon tax without having to somehow vault over GOP denialists. Which could make next month’s ballot referendum in Washington state, Initiative 732, even more momentous. Enacting the country’s first carbon tax wouldn’t just produce a template for other states; it could spark national legislation establishing a U.S. tax on carbon emissions, perhaps as early as 2017.

Sad to say, I-732 went down to defeat Tuesday, resoundingly, 59% to 41% (those figures, updated Nov 11, supersede the 58-42 Election Night result). But that loss is but a charred matchstick in the burnt landscape we awoke to Wednesday morning: a Trump presidency, a continued GOP lock on Congress, and a hard-right Supreme Court.

Where do climate campaigners, and carbon tax proponents in particular, go from here? As I search for answers, I’m bearing these points in mind:

1. Solar, efficiency and wind will keep advancing — Yes, R&D will be cut, maybe also tax credits for wind turbines and solar PV. And some states’ rules and regulations affecting siting and financial treatment for renewables and efficiency could turn for the worse. But clean energy’s rapid growth isn’t going to stop. Tech progress, plummeting costs, and the advent of business models to handle logistics and financing remain powerful forces. As clean energy spreads, so will the constituency for aggressive climate policy — perhaps even carbon taxes, a possible scenario laid out last year by David Roberts of Vox (he called it “strategic sequencing of climate policies”) that is especially pertinent today.

OK, polls took a hit this week, but this one is still striking.

Polling stumbled this week, but these results are still striking.

2. Americans may be less averse to carbon taxes than you think — It’s a shame I-732 didn’t win, not least because the heroic activists at Carbon Washington worked their butts off for it. But let’s not write off carbon taxing. The defeat of the Washington referendum owes a lot to the unfortunate split within the green movement. Carbon taxes that prioritize equity and protect low and moderate-income families can be politically popular, as suggested by a 2015 poll by Stanford and Resources for the Future — the only national polling to date of explicitly revenue-neutral carbon taxing.

3. The Clean Power Plan is in the rear-view mirror — Don’t fret too long over the likely dismantling of the Obama administration’s Clean Power Plan. Events have largely overtaken it, with U.S. coal-fired power generation cut in half in just a decade. Calculations we’re finalizing at the Carbon Tax Center will show that by year’s end the U.S. electricity sector will have already made nearly all of the carbon reductions the CPP demanded for it by 2030. And while much of that progress was sparked by EPA’s Mercury and Air Toxics rule that helped precipitate coal plant shutdowns, Americans’ long-standing support for clean air will make it hard for even a President Trump to dial back those standards.

crescent-dunes-solar-project-in-nevada-_-nyt-_-9-nov-2016-_-from-overview-by-benjamin-grant

Crescent Dunes Solar Energy Project, Nevada, aerial photo by Benjamin Grant, courtesy NY Times. Solar farms and rooftops will keep sprouting despite Trump.

4. The Law of Reaction (“Pride Goeth Before a Fall”) — We’ve seen it time and again: over-reaching that precedes a disastrous stumble: A nuclear industry spokesman publicly inviting a prominent TV news anchor to “come see the safety features at our new flagship reactor at Three Mile Island,” just before the infamous meltdown in 1979. The bombshell that seismic attenuators were installed backwards at one of the Diablo Canyon reactors just as the new Reagan administration was rushing to water down atomic safety regs in 1981. This syndrome isn’t mere coincidence; the media crave counter-narratives. With the Republican Party now “owning” climate change, extreme weather will give us many opportunities to put them on the defensive.

5. Uniting Our Movement — The split in the green movement over I-732 laid bare genuine divisions among climate activists, over leadership and inclusion as well as policy. We can use the new enforced policy hiatus to get better at listening to each other. Carbon tax advocates, myself included, need to commit to sharing and even ceding leadership to more diverse voices. We can also do better at conveying why we place carbon taxes at the center of climate policy, and why we believe they are the best policy complement to divestment and keep-it-in-the-ground campaigns.

Am I “whistling past the graveyard” here? I don’t know, frankly. Trump’s victory is traumatic, and it’s really hard to face the future. But face it we must and will. There’s too much at stake. Fighting for a livable planet and a humane society is what I’ve done my whole life. I’m not stopping now, and I know neither are you.

Naomi Klein Is Wrong On The Policy That Could Change Everything

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On this last day before the elections, the afternoon light was waning in my Manhattan office and I thought I could be done fending off attacks on I-732, the Washington state carbon tax initiative.

Not so fast. A CTC supporter wrote me, cryptically, “Naomi Klein should know better by now, no?” I checked Klein’s Twitter feed, @NaomiAKlein, and, uh oh, there it was: a piece by Klein in The Nation, The Carbon Tax on the Ballot in Washington State Is Not the Right Way to Deal With Global Warming.

The policy that could do the most to start changing everything is on the ballot in Washington state.

The policy that could do the most to start changing everything is on the ballot in Washington state.

I read her piece. It’s mercifully brief, just ten paragraphs, so I thought I would let it go. But Klein, author most recently of This Changes Everything: Capitalism vs. The Climate, is charismatic, fluent and highly visible in the climate movement. And just about everything she said in her Nation piece is so misinformed or short-sighted that it feels important to respond. So here goes, in point-counterpoint.

Klein Paragraph 1: The imperatives of the climate crisis and the logic of economic austerity are at war—and Washington State is on the front lines.

CTC: Powerful lede, but is Klein actually tagging I-732 with the dreaded “austerity” label? What exactly does she mean? (Spoiler alert: she never says.)

Klein Paragraph 2: So-called “revenue-neutral” carbon pricing — whereby the proceeds are used to fund tax cuts — has long been a cherished hobbyhorse of free-market economists and the odd Republican who favors climate action. It’s also the policy of choice for big polluters like ExxonMobil. And now this right-wing friendly model is being pushed in Washington State, thanks to Initiative 732.

CTC: “Tax cuts.” A percentage point cut in Washington’s state sales tax — the principal means by which I-732 ensures that raising energy prices through a carbon tax won’t injure low- and middle-income families — is dismissed as a mere “tax cut,” a phrase that of course conjures giveaways to the hedge-fund class. What Klein labels right-wing is actually friendly to and designed for the very groups she purports to care about: families below or near the poverty line; undocumented immigrants; over-leveraged folks struggling to stay middle-class.

Klein Paragraph 3, abridged: [If I-732] is approved by voters, it would be a disastrous precedent that could set back the climate justice movement for a decade  — time that we simply can’t afford to lose.

CTC: Klein turns logic on its head. Following a decade of nearly total legislative silence on carbon taxes — a silence imposed not just by Republican denialists but by a myopic U.S. green movement — Klein frets that enacting an actual carbon tax in the USA and blowing open the door to a possible national carbon tax will set back climate action for another ten years?

Klein Paragraph 4: Some have accepted the logic that something is better than nothing, even arguing that a “tax swap” could substitute for a just transition to a low-carbon economy. The evidence proves otherwise. In British Columbia, two-thirds of the tax cuts have ended up in corporate pockets, while carbon emissions have been rising in recent years and the fracking industry has boomed.

CTC: By design, most of the BC carbon tax revenues end up in taxpayers’ pockets through personal income tax cuts as well as a low-income tax credit. A 2015 study by University of Ottawa graduate students found BC’s carbon tax “highly progressive” distributionally. In any case, I-732 is explicitly and intentionally structured differently, to apply 75 percent of carbon tax revenues to cut the Washington sales tax.

Yes, CO2 emissions in British Columbia are up slightly since 2012, but that’s because the BC tax level has stayed fixed. In contrast, the Washington carbon tax would rise 3.5% a year faster than the general inflation rate. And If fracking has boomed in BC, don’t blame the province’s carbon tax for its lack of a keep-it-in-the-ground movement.

Klein Paragraph 5: By some estimates, I-732 would raise gasoline and electricity prices less than 15 percent by 2040 in Washington State—hardly enough to jumpstart an urgent, sweeping phase-out of fossil fuels. Meanwhile, it would offset carbon revenues by cutting taxes for big corporations, including major polluters. (According to the Seattle Times, Boeing could see windfalls of tens of millions annually.)

memo-to-naomi-klein-_-pullquote-for-7-nov-2016-postCTC: Klein’s math is off; by 2040, the tax-caused rise in gasoline prices would be 25 percent. But the bigger point she ignores is that a carbon tax in any one state like Washington (or a lone province like British Columbia) can’t be set high because of interstate competitive pressures — which is also why I-732 sets aside 10-15 percent of its revenues for tax reductions for businesses like Boeing. The whole point of the Washington state initiative is to establish a template for other states or, if control of Congress can be flipped, for a national carbon tax that can rise briskly and deliver massive carbon reductions, as we noted in a blog post last month.

Klein has five more paragraphs, but in the interest of time let’s cut to the chase:

Klein Paragraph 9: A paltry, revenue-neutral carbon tax simply cannot deliver the massive green energy investments and community-driven solutions we all need. Science-based climate action means an unprecedented, rapid, and decisive shift to renewables; a truly equitable carbon tax can play an important role in spurring the transition, but it won’t work unless we make the polluters pay, and put their immoral profits to work repairing the damage they have knowingly created. The way to do that is to mobilize the broadest possible coalition—led by the front-line communities who stand to benefit most from building a cleaner and fairer economy.

CTC: Talk about “making polluters pay” is great rhetoric, but in our society as currently configured that includes all of us who flip on switches, turn on ignitions and buy stuff. And since the society we live in (to echo another post of mine last month) doesn’t appear to favor massive green energy investments and community-driven solutions, we have to rely even more heavily on robust carbon taxes; and these need to be largely revenue-neutral if they’re going to (i) not drive low-income families further into poverty and push middle-income families deeper into debt, and (ii) be politically acceptable.

Klein’s call to put fossil fuel company profits to work repairing damages is more of the same empty rhetoric. The task before us is to shrink, shame and strangle the fossil fuel companies. If Klein can offer a way to do that more quickly and effectively than a briskly rising U.S. carbon tax — one that I-732 can start paving the way for — I’m all ears.

Until then, could she please turn down the volume?

Addendum: CTC contributor Dan Lazare presciently dissected Klein’s limited comprehension of the power of carbon taxing almost two years ago, in this space, with Why Is Naomi Klein So Cool on a Carbon Tax? It’s a great read.

Fighting in the Trenches Doesn’t Excuse Ignorance on Carbon Taxes

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A charitable way to view Food and Water Watch’s intemperate and misguided attacks this week on carbon taxing is that these energetic activists are so consumed with fighting fracking, pipelines and mines that they haven’t had time to absorb how carbon taxes can help dry up the “need” for new fossil fuel infrastructure.

An alternative take on their screeds in Yes Magazine and AlterNet is that FWW inhabits an ideological blind corner that sees carbon taxing as a neoliberal plot to undermine the climate movement rather than as a policy tool that can play a decisive part in keeping fossil fuels in the ground, forever.

Shouldn't you understand what a carbon tax is before you castigate it?

From Food & Water Watch’s home page. Shouldn’t you understand what a carbon tax is before you castigate it?

Whichever, FWW’s case is toxic, simplistic and wrong. Toxic because its emergence in the home stretch of the carbon tax campaign in Washington state threatens to move critical Yes votes into the No camp on Nov. 8. Simplistic because the arguments suggest that FWW hasn’t grasped the ABC’s of carbon taxes. And wrong because the group’s criticisms of the British Columbia carbon tax — the Washington referendum’s political and policy template just across the border — are rife with errors.

Just look at the headlines of FWW’s op-eds.

“Here’s Why a Carbon Tax Helps Fossil Fuel Companies, Not the Environment” (FWW’s op-ed in AlterNet)

A carbon tax helps fossil fuel companies? Sure, like cigarette taxes help tobacco companies and sugary drink taxes help soda companies. Or taxes on bullets would help the makers of assault rifles. In real life, carbon taxes are a mortal threat to fossil fuel companies because they destroy demand for fossil fuels — both by shrinking end-user demand (as people drive less, businesses adopt energy-efficiency measures, etc.) and by helping renewables out-compete them.

“Why Exxon Loves the Carbon Tax—and Voters Should Not” (FWW’s op-ed in Yes! magazine)

Yes, from time to time Exxon CEO Rex Tillerson utters a positive word about carbon taxes — token ones that make for good p.r. but are 5-10 times smaller than those for which CTC and other carbon tax advocates campaign. Indeed, we’ve wondered if Exxon’s reputed support is a maneuver to turn naïve climate advocates against carbon taxing — “if Exxon wants it, it must be bad.” Fact is, Exxon doesn’t want robust carbon taxing; and even if it did, a policy should be judged on its merits, not by one of its putative supporters.

Left-leaning economists like Robert Reich, Joseph Stiglitz and Robert Frank support carbon taxes. So does Ralph Nader. So did Bernie Sanders, in his outspoken, unvarnished, way, throughout the Democratic Party primaries. How much is Exxon paying them?

Both FWW op-eds draw from the group’s new report, The British Columbia Carbon Tax: A Failed Experiment in Market-Based Solutions to Climate Change. The report is wrong from the title, down. (Hint: a carbon tax isn’t a market-based policy; see below.)

FWW tips its hand in its thumbnail for the report on its home page (you’ll need to page down 5-6 times). The “tag” for the report is “Pollution Trading.” FWW could have written “Potato Chip” and been more on point. Carbon taxes are direct charges on fossil fuels according to their carbon pollution content, period. They’re simple and transparent. Nothing is traded, which means no market.

FWW could learn from Tim DeChristopher and fight for carbon taxes and against carbon infrastructure.

FWW could learn from Tim DeChristopher and fight for carbon taxes and against carbon infrastructure.

Pollution trading, or cap-and-trade, “puts a price on carbon” via the back door — hiding the price, if you will, in carbon “permits” that are traded on pollution “markets.” CTC and other carbon tax advocates spent countless hours in 2007-2010 explaining why pollution trading was ill-suited for internalizing climate costs into the prices of fossil fuels, and exhorting big green groups like NRDC and EDF to back straight-up carbon taxes instead. (Our Web page delineating cap-and-trade’s drawbacks actually has “dead ends” in its URL.)

We’re well acquainted with emissions progress in British Columbia, from our December 2015 report, British Columbia’s Carbon Tax: By The Numbers. Sadly, the analytical criticisms of the British Columbia carbon tax in Food & Water Watch’s report don’t hold up any better than the rhetorical ones. Here’s a sampling.

Claim: “Taxed greenhouse gas emissions rose by a total of 4.3 percent between 2009 (the first full year that the tax was in place) and 2014. (FWW report, p. 4).”

Fact: A proper comparison must start in 2007, the last pre-tax year, or 2008, when the carbon tax took effect, on July 1. Using 2009 as a baseline is nonsensical since the tax had already gone into effect; it’s also biased on account of the 2009 recession (which FWW mistakenly located in 2008, see p. 2). For the record, BC 2014 emissions from fossil fuel combustion of 43,940 kilotonnes of CO2 were 1 percent less than emissions of 44,363 kT in 2007 and 44,244 kT in 2008. (See methodological note at end.)

British Columbia’s GDP has grown considerably from 2008, creating the emissions pull that tends to accompany economic activity. Normalized per unit of GDP, 2014 emissions were down by 12% from 2008 and by 11% from 2009. While that’s not enough, it’s around what one would expect from a “starter” carbon tax such as BC’s.

Claim: “British Columbia’s carbon tax failed to reach the reduction targets necessary to ensure a sustainable climate, demonstrating that carbon taxes are not a viable policy solution to climate change.” (FWW report, p. 2)

Fact: Straw-man alert! It’s true that BC’s carbon tax is too low by an order of magnitude to get “80 by 50” or similar deep cuts. Its value, and that of the similarly designed (though more aggressive) Washington state carbon tax proposal, is to establish the template of carbon taxes, particularly revenue-neutral ones, so that not just provinces or states but entire nations can put robust, briskly rising carbon taxes in place. Indeed, earlier this month PM Trudeau announced that all of Canada will take precisely that step, starting in 2018.

Claim: “A carbon tax is theoretically designed to raise the cost of greenhouse gas emissions, but if those costs are refunded it almost defeats the purpose. The price of climate change is only included at the point of emissions, but since it ultimately is returned to the companies and individuals, over time it may create little disincentive to pollute.” (FWW report, p. 3)

Fact: No, the revenues from the British Columbia carbon tax aren’t “refunded” or “returned,” they’re recycled on an economy-wide basis via tax cuts that are distributed to companies and individuals without regard to the amount of carbon tax they may have paid. This separation of revenue distributions (benefits) from carbon tax incidence (payments or costs) is fundamental to any “revenue-neutral” carbon tax, whether it’s one that primarily uses tax swaps such as BC’s or Washington’s proposed tax, or the “fee-and-dividend” model advocated by Citizens Climate Lobby. FWW’s miscomprehension on this basic point speaks volumes.

Fact: “Individuals ultimately shoulder the majority of the costs of the British Columbia carbon tax, and lower-income individuals . . . bear a disproportionate burden.” (FWW report, p. 8)

Comment: We labeled this point a fact because the first part is true. Individuals, as final consumers of virtually everything our economies produce, do bear the costs of carbon taxes. That’s unavoidable, and it’s also the point, as we’ve written countless times. That’s why it’s important that carbon taxes such as BC’s and Washington’s be revenue-neutral; it ensures that low-income families receive disproportionate shares of the tax reductions or dividend distributions and thus are kept whole despite higher energy prices.

We've been fighting fossil fuels for a long time. I co-authored this report on coal pollution in 1972.

The fight against fossil fuels stretches way back. I co-authored this 600-page report on coal pollution in 1972.

Claim: “Despite significant volatility in U.S. gasoline prices in recent years, the total number of vehicle miles traveled and household car travel demand changed very little in response to price fluctuations. Without sufficient alternative transportation options, people will continue to drive their cars regardless of significant changes in gasoline prices.” (FWW report, p. 6)

Fact: The supposed price-inelasticity of energy demand has become an article of faith for many on the political left — though whether it preceded or post-rationalized a distaste for energy taxes is hard to say. I’ve studied the price sensitivity of energy demand for decades and written about it extensively, most recently here. I can report that while gasoline is the least price-elastic of fuels, it’s far from inelastic (in my linked post I report a U.S. gasoline price-elasticity of around -0.35). This shouldn’t be surprising, insofar as most automobile use in both the U.S. and Canada is for non-work trips, which on average have a high discretionary component.

There’s more, but you get the point. Lest my criticisms appear harsh, I note that I sought to engage FWW director Wenonah Hauter in a dialogue on carbon taxes last winter, after she published a letter in the New York Times disparaging the tax in British Columbia.

After one back-and-forth, I wrote again and closed as follows:

Wenonah, like you, I’ve been in the trenches fighting fossil fuels for a long time. We may have different ideas about how to get to the same goal, but I hope we can both pursue that goal without running at cross-purposes.

She never replied.

Addendum (Jan. 5, 2017): Several CTC supporters have drawn our attention to the assertion in FWW’s Failed Experiment report that from 2005 to 2013 emissions fell further in Ontario, which didn’t have a carbon-pricing system, than in British Columbia, which did. According to FWW, this shows that “mandatory replacement of fossil fuel energy plants with renewable, carbon-free forms of energy can rapidly and permanently reverse emissions trends.” Not quite. Ontario had low-hanging fruit that BC lacked: coal-fired electricity generation. And what allowed Ontario to eliminate coal-fired generation and put up impressive carbon-reduction numbers was increased output from its nuclear power plants: from 2003 to 2013, coal-fired electricity generation fell by 38 billion kWh while nuclear output rose by 30 billion as the nukes were expensively “refurbished.” Carbon-free, yes, but not the “renewable” energy FWW would like to credit.

Methodological note: our calculations here, which add 2014 to the data in our year-ago report, exclude emissions from Public Electricity and Heat Production. This category — essentially electricity generation from burning fossil fuels — accounts for just 2 percent of BC emissions from fuel combustion but for nearly 20 percent in the rest of Canada. More importantly, that sector constitutes most of the “low-hanging fruit” for reducing carbon emissions, since electricity generation affords more opportunities for quickly and easily substituting low-carbon supply than any other major sector. Eliminating this category enabled us to compare changes in emissions over time — the heart of our analysis — on an equal basis between BC and the rest of Canada.

The Political Meltdown That Could Save The Climate

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Anyone with a lit screen knows by now that shell-shocked Republicans are abandoning the Trump ship in droves. As the exodus threatens to become a stampede, with a longtime GOP operative declaring that “The Republican Party is caught in a theater fire; people are just running to different exits as fast as they can,” talk of election “win probabilities” is pivoting from the presidential race to Congress.

A Trump collapse could give Democrats back the House,” reported Vox this weekend, citing analysis that a mere six-point Clinton plurality could swing the 31 needed seats in its wake. While that’s probably over-optimistic, a more decisive margin over Trump might do the trick.

The ramifications for climate could be huge: Democratic control of both the White House and Congress clears a path for a federal carbon tax without having to somehow vault over GOP denialists. Which could make next month’s ballot referendum in Washington state, Initiative 732, even more momentous. Enacting the country’s first carbon tax wouldn’t just produce a template for other states; it could spark national legislation establishing a U.S. tax on carbon emissions, perhaps as early as 2017.

Infographic from Yeson732.org. The revenue-neutral carbon tax design has alienated some Washington-state climate advocates.

Infographic from Yeson732.org. The revenue-neutral carbon tax design has turned off some Washington-state climate advocates.

Let’s be clear: a U.S. carbon tax isn’t just helpful climate policy. It’s the core of any program for shrinking carbon emissions massively, relentlessly and globally. Only a briskly rising carbon tax rewards and thus bends every investment, decision and behavior toward less use of fossil fuels. Only a carbon tax can be replicated so the world’s nations can meet the commitments they made in Paris a year ago and ratified last month. And only a carbon tax produces revenues that can protect low- and middle-income families as fossil fuel prices rise — as they must to blow open the gates to the renewables-and-efficiency revolution at full scale.

The holistic power of carbon taxing is what motivated the grassroots organizers at an upstart group called Carbon Washington to crisscross the state last year and collect the 350,000 signatures that placed “I-732” on the Nov. 8 ballot. It’s also what makes it vexing that many green groups in the state have refrained from supporting I-732. Some are actively opposing it.

The schism has been covered widely (and insightfully) in recent weeks, most recently by Natasha Geiling in Think Progress. “Opposition to Washington’s historic carbon tax initiative is coming from the unlikeliest of sources,” reads her headline, which then asks, “It’s the only carbon tax on the ballot in the country. So why are some environmental groups fighting it?”

The answers are many. Carbon WA drew up I-732 without consulting fully with the entire spectrum of climate advocates. The design of its carbon tax is more attuned to the market than to government, with the carbon revenues “returned” to households (see graphic) rather than invested directly in clean energy and community remediation. And perhaps the in-state green groups are guided more by local and state concerns while Carbon WA set its sights nationally and globally.

Those points can be parsed endlessly. But the central fact for climate, which the Republican implosion is making more salient daily, is that the fissure in Washington state threatens to sink the initiative and botch our chance to put a carbon tax on the national legislative agenda starting months from now. Polling on I-732 suggests that a deficit in August may have flipped into a slight plus, but a fifth of voters are still undecided, and disunity among climate advocates makes it tougher to seal the deal.

There’s no second chance at this in the Evergreen State. Washington’s legislature has shown no appetite for a carbon tax, and a new referendum can’t get on the ballot until 2018. Organizing in other states has fallen short as well. Whether we like it or not – and the economist in me makes me a big fan – I-732 is the only game going.

The U.S. elections will doubtless take further twists in the final four weeks, but the possibility of debating and actually winning a national carbon tax is suddenly, miraculously upon us. The referendum in Washington state is going to function as the first big test. Whatever its imperfections, the climate movement’s greatest imperative must be to come together and pass I-732.

Washington Carbon Tax Ballot Initiative Picks Up Biggest Corroboration Yet

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The Pacific Northwest’s leading ecology think tank, Sightline Institute, this week issued three linked papers intended to give Washington State voters an “impartial and informed” analysis of Initiative 732, the Nov. 8 ballot measure to establish the nation’s first statewide carbon tax.

Ruth Mountain in the North Cascades. We summitted it in 1972, before the onset of severe climate change. Photo courtesy of peakery.com.

Ruth Mountain in the North Cascades. Snow was deep when we summited it in late August 1972, before the onset of rising temperatures. Photo courtesy of peakery.com.

The takeaway is clear: the Sightline papers blow away the objections that for months have clouded perceptions of I-732 and threatened to capsize the extraordinary grassroots movement led by CarbonWA that last year collected 350,000 signatures and made the Evergreen State the epicenter of carbon tax organizing.

Here are key quotes from the Sightline papers:

  1. “We find I-732 a worthy policy to put Washington on a path to cutting pollution and encouraging clean energy while also helping low-income families by making Washington State taxes less regressive.”
  2. “I-732 would give Washington the continent’s, if not the world’s, most potent, persistent, and comprehensive incentive to move swiftly beyond dirty fossil fuels and to a carbon-free future.”
  3. “I-732 is revenue-neutral, to the best of anyone’s ability to forecast it… [The argument to the contrary] is a red herring… I-732 is likely to be much closer to revenue-neutral than the [State Department of Revenue’s] forecast suggests… Even if the Department’s estimates are correct, I-732 will still be a rounding error… I-732 will likely have less than a 1 percent impact on state tax revenue for decades.”
  4. “Initiative 732 does exactly what the scientists and economists prescribe: it sets a science-based, steadily rising price on pollution. The citizens’ initiative covers most of the state’s climate pollution, makes the tax code more progressive, and is administratively elegant.”
  5. “I-732 would be the biggest improvement in the progressivity of Washington’s state tax system in 40 years.”

 
Individually and collectively, these statements demolish the major criticisms that have been leveled against the carbon tax initiative.

#1 validates CarbonWA’s claim that the carbon tax is economically progressive — a result of dedicating the lion’s share of revenues to lowering the regressive state sales tax, with other funds allocated to funding the Working Families Rebate — an extension of the federal Earned Income Tax Credit.

#2 validates the precept that the most potent way to eliminate carbon pollution is to tax it, and confirms the organizers’ belief that establishing the first U.S. statewide carbon tax could be a climate breakthrough.

#3 refutes the assertion by state budget analysts that the I-732 revenues won’t fully pay for the tax cuts, calling it a “red herring.”

#4 and #5 are icing on the #1-#2-#3 cake.

(We admit to having grabbed the five points from a CarbonWA press release; it’s late Friday afternoon here on the East Coast and we’re trying to wrap the week. But we did confirm each quote from the Sightline reports.)

Read the Sightline reports and see for yourself the care they took with their analysis and the quality of CarbonWA’s work in devising and fine-tuning I-732. Then go to the Yeson732 Web site to learn how you can donate, network, agitate and support their ballot initiative which, hands down, is the boldest and best effort yet to establish carbon emissions pricing in the United States.

Sightline Report #1, Aug. 1, Weighing CarbonWA’s Tax Swap Ballot Initiative

Sightline Report #2, Aug. 2, Does I-732 Really Have a “Budget Hole”?

Sightline Report #3, Aug. 3, Weighing the Critiques of CarbonWA’s I-732

 

Washington-State Advocates Drop Signatures to Dump Carbon

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On December 30, a crowd of climate activists trooped to the office of Washington’s Secretary of State in Olympia, hauling boxes of signatures with a message from hundreds of thousands of Washingtonians: We want Washington to enact a carbon tax and make our state a U.S. leader on climate action. By filing the signatures before the year-end deadline, the group ensured that Washington must consider a carbon tax, either by a vote of the legislature or as a ballot measure in November.

We first reported on Carbon Washington’s I-732 initiative last June, when the grassroots group had collected 50,000 signatures. Since then their campaign grew exponentially, gathering a total of 362,000 signatures and gaining prominent endorsements both locally and nationally.

The scene in Olympia, the WA capital, on Dec. 30, 2015.

The scene in Olympia, the WA capital, on Dec. 30, 2015.

The signature total far surpassed the 246,372 valid signatures required to advance the initiative to the legislature. In fact, it puts I-732 in Washington State’s all-time top 10 by most signatures collected. This is especially impressive given that Carbon Washington relied on volunteer labor and grassroots donations, disproving skeptics who said collecting the necessary signatures was impossible without at least $1 million to hire paid petitioners.

Now Washington’s divided state legislature will consider the measure — the 2016 session runs from January to March. I-732 was designed to meet fiscal conservatives halfway; it is revenue-neutral, pledging carbon tax revenues to reduce the state sales tax. But while the measure has been endorsed by some prominent Republicans, including Harvard economics professor (and former Romney advisor) Greg Mankiw, it has yet to win support from Republican legislators.

If the legislature doesn’t enact I-732, the measure will appear on the ballot in November, alongside what will almost certainly be a hotly contested presidential election. Advocates hope this will lead to higher voter turnout, especially among younger voters, which might boost the measure’s chance to pass.

Canada / British Columbia

Canada’s Federal Carbon Pricing Program

Unless noted, tax rates on this page are in Canadian dollars and metric tons. Multiply by 0.68 to convert to U.S. short-ton terms, based on the 0.75 January 2023 U.S.-Canada exchange rate.

Canada first implemented a carbon pricing scheme in 2016 with the Pan-Canadian Framework on Clean Growth and Climate Change, a federal program taxing emissions in a bid to aggressively pursue the country’s Paris climate goals.

Passage of the country’s Greenhouse Gas Pollution Pricing Act in 2018 authorized Canada to implement a national carbon price, which we describe below. As of March 2021, that price stood at CA$30 per metric ton (“tonne”) of CO2 equivalent. Factoring in the 0.80 Canada-U.S. dollar exchange rate at that time and the 0.907 weight ratio between a U.S. “short” ton and a metric ton, that tax level equated to a little under $22 (US) per short ton.

The tax rate was raised to CA$50 per tonne in April 2022, and to CA$65 per tonne of greenhouse gas (GHG) emissions on January 1, 2023. Annual increases thereafter are intended to bring the tax rate to CA$170 per tonne by 2030. The current (2023) price equates to a bit over $44 (US) per short ton.

Canada’s federal carbon charge operates under the Greenhouse Gas Pollution Pricing Act (GGPPA), which provides for two main mechanisms:

  1. A federal fuel charge on fossil fuel distributors, producers, and certain users.
  2. An output-based pricing system (OBPS) that regulates large industrial emitters.

This hybrid–and complex–pricing system can be seen as an attempt to knit together disparate carbon-pricing sentiments and situations among Canada’s ten provinces and three territories. British Columbia has had a provincial carbon tax since 2008 (see below), while Quebec introduced a carbon cap-and-trade program in 2013. At the other extreme, the UCP government in Alberta, the locus of Canada’s fossil-fuel industry and home of massive, carbon-intensive oil-sands mining, stands adamantly opposed to carbon pricing in any form.

GHG emissions in Canada, 1990-2018

Image from Canada.ca

Who Is Subject to the Federal Tax

A province or territory that doesn’t create its own strong carbon pricing system is subject to the GGPPA program and must implement both of the above mechanisms.

There are several ways for a territory or province to implement its own program, mainly price-based systems and cap-and-trade schemas. A jurisdiction choosing either system must decrease emissions in line with Canada’s target. Whatever model a province chooses, it is revenue-neutral on the federal level–revenues generated under the system stay in the province or territory where they originate.

1: Federal Fuel Charge

A province that fails to adopt its own strong carbon pricing policy is, by law, subject to the federal fuel charge. As of March 2021, 6 of 13 provinces and territories were using the federal “backstop” fuel charge: Alberta, Manitoba, Ontario, Saskatchewan, Nunavut, and Yukon. At the mandated increase rate, the tax was to reach $65/tonne in 2023 — around $44/ton in U.S. terms — which it did, in fact. To support Canada’s pursuit of its Paris goals, the charge will rise rapidly thereafter, reaching $170/tonne in 2030. The stipulated 2023-2030 increase rate averages $15/tonne per year, equivalent to a compound growth rate of 15 percent a year.

Province/Territory Carbon Pricing
Alberta Federal
British Columbia BC carbon tax
Manitoba Federal
New Brunswick Output-based pricing system
Newfoundland and Labrador Provincial carbon tax
Nova Scotia Cap and trade
Ontario Federal
Prince Edward Island Carbon levy
Quebec Cap and trade
Saskatchewan Federal
Northwest Territories Carbon tax
Nunavut Federal
Yukon Federal

The fuel charge applies to fuel producers and distributors in backstop jurisdictions that supply any of 21 designated fossil fuels, including diesel, gasoline, and natural gas.

Overall, 90% of revenue raised from the federal fuel charge is to be returned to households in the provinces where the money was collected. In 2020, Parliament’s budget office found that most households in these provinces would get more money back in annual rebates than they paid under the carbon pricing scheme. Between 2022 and 2030, the price of gasoline is projected to rise by 27.6 cents per liter — equivalent to a hefty $1.04 (Canadian) per gallon.

2: Output-Based Pricing System (OBPS)

The GGPPA’s Output-Based Pricing System is intended to put a direct price on industrial carbon pollution without the double exposure from levying the federal fuel charge on them. The OBPS applies in backstop jurisdictions and regulates industrial polluters emitting over 50,000 tons or more of annual greenhouse gas emissions (roughly equivalent to a 6-megawatt coal-fired power plant operating all year at full power). Under the OBPS, these facilities must meet emissions standards by either 1) reducing them outright, 2) paying a carbon tax on excess emissions, or 3) remitting for offset credits or retirement surplus credits.

Carbon Tax: Several provinces, including Quebec and British Columbia, have created their own carbon tax systems to fulfill OBPS.

Remitting for Offset Credits or Retirement Surplus Credits: The offset credit system was just getting started as of March 2021, when the federal government published draft regulations proposing a framework to operate the greenhouse gas offset system contemplated by the GGPPA. With this system, the OBPS creates a financial incentive for energy-inefficient facilities to reduce emissions while encouraging efficient ones to improve. If a facility emits less than its annual limit of carbon dioxide, it earns surplus credits that it can sell to other facilities. If it emits more than its annual limit, it must pay for each extra ton of GHG. For this, a facility has 2 options: 1) pay the carbon price to the government, or 2) remit compliance units.

The offset credit system would contain three elements: 1) these operational regulations, 2) federal offset protocols for running the offset program, and 3) a credit and tracking system to keep track of the trading of surplus credits.

Federal Carbon Tax Revenue

Greenhouse Gas Pricing Report 2019

The federal government in Ottawa predicted that carbon pricing would generate around $2.3 billion in its first year fiscal year, 2019. According to the Greenhouse Gas Pricing Report for 2019, the program actually brought in $2.63 billion, exceeding the projected amount. For the 2019 year’s carbon tax credits, the government paid out $2.196 billion, leaving a difference in actual revenue of $435.9 million. Of that, the government pledged to pay back $225.4 million in tax credits. The overage meant that the federal government owed families in three of the taxed provinces — Ontario, Manitoba, and New Brunswick — over $200 million. (New Brunswick is no longer part of the federal program and uses its own carbon pricing system.)

Legal Challenges

Canada’s Supreme Court confirmed in March 2021 that the federal carbon tax is constitutional. The question was whether the federal government has the authority to force provinces to either join their program or create their own carbon pricing scheme satisfying the federal minimum standards.

Photo of Supreme Court of Canada from CBC.ca, Sean Kilpatrick/The Canadian Press

The case combined three appeals related to the GGPPA: appeals courts in Ontario and Saskatchewan ruled in 2019 that the tax was constitutional — holding that Ottawa had jurisdiction to regulate greenhouse gases as a matter of national concern — but in February 2020, the Alberta Court of Appeal held to the contrary.

The three provinces argued that the federal tax program oversteps into provincial jurisdiction. In March 2021, after reserving judgment 6 months earlier, the Court held 6-3 that the tax was constitutional, ruling that Parliament has jurisdiction to enact the tax because they may “act in appropriate cases, where there is a matter of genuine national concern and where the recognition of that matter is consistent with the division of powers.” The Court noted that “influencing behavior is a valid purpose for a regulatory charge.” The decision will be watched beyond Canada’s borders and could influence other nations’ climate change action plans — especially in the United States, where the federal and state governments interact in a form of cooperative federalism similar to Canada’s.

At nearly the same time, Ontario’s Superior court struck down Ontario Premier Doug Ford’s requirement that gas stations in the province slap anti-carbon tax stickers on their fuel pumps. Ford had criticized the carbon pricing scheme as a “tax grab” and forced gas stations in the province to place a large sticker warning motorists, “The federal carbon tax will cost you,” or face a penalty up to $10,000. The law was struck down as a free speech violation, leaving gas stations free to keep the stickers or tear them off.

Meanwhile, in an infamous milestone, Canada’s Conservatives became the world’s second major political party to officially deny that human-caused climate change threatens the global environment, voting down a motion in March 2021 to recognize the climate crisis as real, as reported by The Guardian. Of course, the first such organization is the Republican Party in the United States, which has effectively held that position since 2010, and with increasing ferocity.

Missing the Mark

Reuters reported in Dec. 2020 that Canada, the world’s 11th largest emitter, based on 2019 data (see chart here), “has missed every one of its emissions targets.” The country isn’t on track to hit its Paris Agreement target to reduce 2030 carbon emissions by 30% below 2005 levels, to 513 megatons of CO2 equivalent. The UN Environmental Program’s UNEP’s Emissions Gap Report 2020 found that Canada would miss that target, based on recent emission trends. But the UNEP revised that finding in September 2020, saying that that the pricing measures proposed by the federal government “will allow the country to meet and exceed its target.” Canada’s Parliamentary Budget Officer estimated in 2019 that a $102/tonne tax in 2030 would be required to hit that target, but Prime Minister Justin Trudeau’s proposal of $170/tonne in 2030 would far exceed that number.

The budget office warned that emissions reduction policy depends on economic growth and oil and natural gas prices: with faster real GDP growth and higher prices, a higher tax would be needed to hit the Paris target; with slower growth and lower prices, the goal would be (relatively) easily met.

Regional carbon pricing in Canada

Of Canada’s ten provinces, four had carbon pricing schemes in place before the Pan-Canadian Framework was introduced. Now, 7 provinces have their own carbon pricing systems.

Carbon pricing by province/territory

British Columbia implemented its own carbon tax in 2008, and Manitoba did the same in 2012. Quebec had a carbon tax from 2007 to 2012 but shifted to a cap-and-trade system in 2012. As of February 2021, Quebec’s current tax rate is $22.40/tonne of emissions.

In 2017, Ontario implemented its own cap-and-trade program, and Alberta adopted a carbon tax program. However, Alberta–a highly carbon-dependent province–abandoned its program in 2019 and is now subject to the federal carbon tax.

British Columbia

British Columbia is Canada’s third largest province, with an estimated 2020 population of 5.1 million. It is also the fastest growing (excluding sparsely populated Prince Edward Island and Yukon Territory), with a nearly 11 percent population rise from 2016 to 2020, vs. 8 percent for the country as a whole.

B.C.’s straightforward and transparent carbon tax was North America’s first carbon pricing program. It began in 2008 at a rate of $10/tonne. The tax increased for four years by $5/tonne annually, reaching a 2012 level of $30, and stood at that level until April 1, 2019, when it was raised to its current price of $40/tonne. The provincial government announced in Spring 2020 that the rate would remain at that level until further notice due to the COVID-19 crisis.

The province’s Climate Action Tax Credit, which returns the carbon tax revenues to households, was increased for the July 2020 – June 2021 year to a maximum annual amount of $174.50 for an adult, their spouse, or their first child in a single-parent family, and a maximum of $51.25 for each additional child.

Residents of B.C. are eligible for the quarterly-issued, non-taxable credit if they are age 19 or older, have a spouse or common-law partner, or are a parent living with their child. The amount a family receives depends on the size of the family and their adjusted net income. The province also paid an additional one-time enhanced payment to families in July 2020 due to COVID-19 with increased maximum credit amounts of $218 per eligible and $64 per additional child.

This quote in Mother Jones from Clean Energy Canada’s Merran Smith helps explain the long reach of British Columbia’s carbon tax.

A 2014 Mother Jones article by journalist Chris Mooney (now at the Washington Post), British Columbia Enacted the Most Significant Carbon Tax in the Western Hemisphere. What Happened Next Is It Worked., still stands as the most digestible yet comprehensive story on B.C.’s carbon tax. Among its findings (all as of early 2014):

  • The tax has brought in some $5 billion in revenue, with more than $3 billion returned in the form of business tax cuts, along with over $1 billion in personal tax breaks, and nearly $1 billion in low-income tax credits (to protect those for whom rising fuel costs could mean the greatest economic hardship).
  • “Polls have shown anywhere from 55 to 65 percent support for the tax,” according to Stewart Elgie, director of the University of Ottawa’s Institute of the Environment, who added, “It would be hard to find any tax that the majority of people say they like, but the majority of people say they like this tax.”
  • “Since its passage, gasoline use in British Columbia has declined seven times as much as might be expected from an equivalent rise in the market price of gas, according to a study by two researchers at the University of Ottawa. That’s apparently because the tax hasn’t just had an economic effect: It has also helped change the culture of energy use in BC.”

Emission Reductions from British Columbia’s carbon tax 

Much of the emissions reductions data in this section is from our 2015 report, British Columbia’s Carbon Tax: By The Numbers.

Image from British Columbia Environmental Reporting BC

 

From inception of the carbon tax in 2008 to 2015, British Columbia’s per capita emissions of carbon dioxide and other taxed greenhouse gases declined, continuing a downward trend that began in 2004. Averaged across the period with the tax, 2008 through 2013, B.C.’s per capita emissions from fossil fuel combustion covered by the tax were nearly 13 percent below the average in the pre-tax period under examination (2000-2007), as shown in the graphic directly below.

The 12.9% decrease in British Columbia’s per capita emissions in 2008-2013 compared to 2000-2007 was three-and-a-half times as pronounced as the 3.7% per capita decline for the rest of Canada. This suggests that the carbon tax caused emissions in the province to be appreciably less than they would have been without the carbon tax.

These figures come with an important caveat: They exclude emissions from electricity production ― a minor emissions category for British Columbia, which draws most of its electricity from abundant (and zero-carbon) hydro-electricity, but a major emissions source for much of Canada. This sector accounted for just 2 percent of total emissions from fossil-fuel combustion in British Columbia in 2013, but for nearly 20 percent in the rest of the country. More importantly, that sector constitutes most of the “low-hanging fruit” for reducing carbon emissions, since electricity generation affords more opportunities for quickly and easily substituting low-carbon supply than any other major sector. Eliminating it from our analysis allowed us to compare changes in emissions over time on an equal basis between B.C. and the rest of the country.

In terms of total emissions (not per capita), British Columbia emissions of CO2 and other greenhouse gases covered by the carbon tax (but excluding the electricity sector) averaged 6.1% less in 2008-2013 than in 2000-2007. (The reduction was 6.7% when electricity emissions are counted.) The 6.1% contraction is roughly what would be expected from a small carbon tax such as British Columbia’s.

B.C.’s carbon tax does not appear to have impeded economic activity in the province. Although GDP in British Columbia grew more slowly during 2008-2013, the period with the carbon tax, than in 2000-2007, the same was true for the rest of Canada. From 2008 to 2013, GDP growth in British Columbia slightly outpaced growth in the rest of the country, with a compound annual average of 1.55% per year in British Columbia, vs. 1.48% outside of the province.

Nevertheless, GHG emissions have increased of late in British Columbia, with 2017 emissions a mere 0.5 percent less than 2007 levels. The upward trend can be attributed to three factors: 1) an 8 percent rise in oil and gas production since 2007, 2) sizeable population growth as noted earlier, and 3) the hold in the carbon tax level since 2012. This points to the necessity of raising the tax, currently at $40/tonne, to force polluters’ hand. The provincial government is planning to do so, reaching $80/tonne in 2024.

In July 2012, on the occasion of the fourth (and final) annual increase in the B.C. carbon tax, the Toronto-based Financial Post newspaper wrote of 4 key reasons why BC’s carbon tax is working. (The Post drew its text from the June 2012 report by Sustainable Prosperity, British Columbia’s Carbon Tax Shift: The First Four Years.)

  • Drop in Fuel Consumption: “The carbon tax has contributed substantial environmental benefits to British Columbia (BC). Since the tax took effect in 2008, British Columbians’ use of petroleum fuels (subject to the tax) has dropped by 15.1% — and by 16.4% compared to the rest of Canada. BC’s greenhouse gas emissions have shown a similarly substantial decline (although that analysis is based on one year’s less data).”
  • Growth Unaffected: “BC’s GDP growth has outpaced the rest of Canada’s (by a small amount) since the carbon tax came into effect – suggesting that it has not adversely affected the province’s economy, as some had predicted. This finding fits with evidence from seven other countries that have had similar carbon tax shifts in place for over a decade, resulting in neutral or slightly positive effects on GDP.”
  • Revenue-Neutral: “The BC government has kept its promise to make the tax shift ‘revenue neutral’, meaning no net increase in taxes. In fact, to date it has returned far more in tax cuts (by over $300 million) than it has received in carbon tax revenue – resulting in a net benefit for taxpayers. BC’s personal and corporate income tax rates are now the lowest in Canada, due to the carbon tax shift.”
  • Greenhouse Gas Emissions Declining: “From 2008 to 2010, BC’s per capita GHG emissions declined by 9.9% — a substantial reduction. During this period, BC’s reductions outpaced those in the rest of Canada by more than 5%.”

The New York Times, Toronto Globe & Mail, and The Guardian reported on the tax’s success in 2012 and 2014:

“Clean Fuels” vs. Carbon Tax in the Pacific Northwest

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Even in ecologically-minded Washington and Oregon, states where voters want government action on climate change, a divide among environmentalists threatens to undermine progress on the issue. A Carbon Washington ballot initiative to create a statewide carbon tax is gaining momentum, as we wrote last month. Yet several environmental groups are attacking the proposal as politically infeasible and socially regressive.

Instead, state and regional groups like Climate Solutions and the Alliance for Jobs and Clean Energy are pushing “clean” fuels standards. Their proposal, patterned on regulations in California and British Columbia, would mandate a mere 10% drop in the carbon intensity of transportation fuels over 10 years ― a small fraction of the deep reductions needed.

The carbon tax sought by Carbon Washington would cut emissions 4-5 times as much as the proposed WA Clean Fuels Standard (Source: CTAM).

The carbon tax sought by Carbon Washington would cut CO2 4-5 times as much as the proposed WA Clean Fuels Standard (Source: CTAM).

Their course is difficult to fathom. Carbon taxes would cut emissions more and cost less than clean fuels regulations. And dividing environmentalists in order to pursue a lesser policy makes no sense strategically. Here are three reasons why a clean fuels standard doesn’t stack up:

1. Clean fuels standards won’t be effective

A model used by the Washington State Department of Commerce allows us to compare projected emissions reductions from the clean fuels standard with the carbon tax proposed by Carbon Washington in a measure known as I-732. (The tax would start at $10/ton of CO2, rise to $25 in year two, then increase 3.5% annually plus inflation.)

The 10% clean fuels standard would lower overall Washington CO2 emissions only 4% by 2040, not even a quarter as much as the 18% reduction projected from the I-732 carbon tax.

The reason is simple: a clean fuels standard only attacks emissions from the supply side of one sector, albeit an important one, transportation. In contrast, a carbon tax works across the entire economy, influencing every carbon-related decision about both supply and demand in every sector ― manufacturing, heating, electricity, etc. This means that, while a clean fuels standard only affects the carbon content of liquid fuels, a carbon tax also incentivizes less fuel usage, period. This transforms economies, cutting pollution and congestion through a vast array of actions encompassing urban density, freight logistics, walking, cycling, transit, and more mindful decision making.

clean fuels transport graph _ snippedIn short, the difference in emissions between a carbon tax and a clean fuels standard is the difference between a society that takes current levels of automobile dependence as a given, and one that seeks to support a myriad of ways to transition to something different.

2. Clean fuels standards are more expensive

The Oregon Environmental Council writes:

The Clean Fuels Program costs the state virtually nothing. The burden of responsibility for reducing pollution is placed on the oil industry.

This conspicuously ignores how the oil industry passes down its costs of compliance to consumers in the form of higher prices. The Oregon Department of Environmental Quality (DEQ) has said gas prices will rise between 4 and 19 cents per gallon. An industry lobby group, the Western States Petroleum Association, is garnering support to repeal clean fuels by highlighting this not-so-hidden price increase.

Consumers aren’t stupid, they generally realize more regulations mean higher prices. A carbon tax raises fossil fuel prices too, of course ― that’s the point; but the revenue it generates can be disbursed to consumers as income or sales tax cuts, or via a straight-up “dividend” check, as Oregon Climate has proposed. [Read more…]

Feeling the Heat: A Carbon Tax Gains Grassroots Momentum in Washington State

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Seattle on the summer solstice. Crowds line Fremont Avenue in anticipation of the annual parade of naked bicyclists. Carbon Washington co-director Kyle Murphy is giving a pep talk to a group of volunteers that includes idealistic college students, veteran environmentalists, and former Seattle Mayor Mike McGinn.

“You’re simply offering them the opportunity to participate in the democratic process. You don’t need to persuade anyone, just give them a chance to say yes.”

Seattle, June 2015: Petitioning for Carbon Washington.

Seattle, June 2015: Petitioning for Carbon Washington.

I’m helping Carbon Washington (CW) collect signatures for Measure I-732, which would put a carbon tax on the state ballot in 2016. In general, people want to participate. Almost no one turns me down. I pass out multiple signature sheets as parade-goers fumble for pens. I’m talking to eight people at once, even while competing with the naked bikers for attention. A record-breaking drought is setting the stage for a long wildfire season, and climate change is already on everyone’s mind. In a single afternoon we collect more than 1,500 signatures.

The appeal of CW’s proposal is rooted in its overarching simplicity. Polluters pay, everyone else benefits. The measure would put a price on carbon emissions, forcing fossil fuel companies to internalize some of the social and environmental externalities of their business. The tax starts at $15 per ton of CO2, rises to $25 in year two, and then increases at 3.5% plus inflation annually. This long and steady increase will drive down CO2 emissions in the state.

Emissions would fall more if Washington's power wasn't nearly all hydro. (Source: CTAM model)

Emissions would fall more if Washington’s power wasn’t nearly all hydro. (Source: CTAM model)

The tax is revenue neutral to appeal to conservatives. It uses the expected $1.7 billion in annual revenue to overhaul Washington State’s notoriously regressive tax code. Most of the money goes to lower the state sales tax from 6.5% to 5.5%. The 3.5% annual increase in the carbon tax is designed to carefully offset the rising value of the sales tax reduction, so that the measure stays revenue-neutral for 40 years. Another $200 million a year is used to fund the Working Families Rebate – an extension of the federal Earned Income Tax Credit. These two pieces make I-732 the state’s most progressive tax legislation since groceries were exempted from sales taxes in 1977.

The third element of CW’s plan takes $200M to eliminate the state’s Business & Occupation tax on manufacturers. The intent is to make the state’s businesses more competitive and cushion any job losses due to the tax. The average manufacturer will pay in carbon taxes close to what it will gain from the elimination of the B&O tax. Unlike the B&O tax, however, carbon taxes do not increase as the business grows – as long as it can grow without increasing its carbon emissions.

Still, Carbon Washington faces high hurdles. A ballot initiative requires 246,372 signatures – 8% of the votes cast for governor in the most recent election. Since up to one-quarter of signatures fail the verification process, CW is aiming for 315,000. Successful initiatives, like a Michael Bloomberg-financed gun-control measure that passed in 2014, have needed to raise around a million dollars to reach that threshold. Carbon Washington is hoping to rely on an extensive volunteer network to do it for less than half the price. Still, more funding and volunteers are needed.

Measure I-732 steers revenues to households and manufacturers.

Measure I-732 steers revenues to households and manufacturers.

Assuming CW succeeds, it’ll have to defend its proposal on the ballot against the inevitable onslaught of Koch-funded interest groups. Some other environmental groups are skeptical that Washingtonians will vote for a proposal that openly uses the dreaded ‘T’ word. Climate Solutions, a regional organization, threw its weight behind Governor Jay Inslee’s cap-and-trade proposal. Despite attempts to appeal to Republicans, including a carve-out for the state’s only coal plant, that proposal failed to gain traction in the legislature. Climate Solutions isn’t backing CW’s proposal, afraid to lose what will surely be a big fight.

Yet if the conversations I had were any indication, Washingtonians are receptive. They have an example to their north, in British Columbia, of a successful and popular carbon tax, so oil industry scare tactics may prove less effective with voters. In polls, support varies between 30% and 60%, depending on how the issue is framed. Victory will be determined by whether enough voters can be educated about the proposal. By talking to voters and collecting signatures one at a time, Carbon Washington is getting a head start.