Carbon Tax Gains Steam To Fight Global Warming


NEW YORK (MainStreet) — Climate change is making headlines in the United States again after the release of the White House's Third U.S. National Climate Assessment in May, which reported its impacts are already rippling through American life and negatively impacting our agriculture, infrastructure, and economy.

This resurgence in the national discourse on climate change has also reinvigorated the debate about how to address it on a policy level, with many now calling for a federal carbon tax. For instance, a New York Times article stated in April that "...putting a price on emissions of carbon dioxide and other greenhouse a fundamental approach that could help redirect investment toward climate-friendly technologies."

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Just as there is an overwhelming consensus among climate scientists that the globe is warming and that the warming is due to human activities such as the burning of fossil fuels, there is also an impressively large consensus among economists that a carbon tax would be the most efficient and effective method for addressing climate change.

If done correctly, a carbon tax also has the potential to stimulate the national economy, especially for the people of MainStreet.

A recent study from the environmental think tank Resources for the Future found that a carbon tax of $30 per ton would yield $226 billion a year in revenue while cutting carbon emissions by 15%.

This $30-per-ton price tag is the Canadian equivalent of what the government of British Columbia currently imposes.


After the BC carbon tax law passed in 2008, sales of motor fuels and other petro-products declined by 15%, while raising approximately $5 billion in revenue. Of that figure, $3 billion was returned as business tax breaks, $1 billion as personal tax breaks and the remaining $1 billion as low-income tax credits.

"We want [a carbon tax that] imposes a modest fee on carbon that rises steadily over time so that it doesn't send shock waves through the economy or consumers," says Mark Reynolds, Executive Director of the Citizens Climate Lobby, an advocacy group that has been at the forefront of pushing for a federal carbon tax.

Founded in 2007 in San Diego, the CCL currently has approximately 300 chapters across the country.

As Reynolds envisions it, an effective carbon tax would start at around $15 per ton and increase $10 annually. Though the tax would be imposed on fossil fuel companies at the extraction point, those costs would eventually trickle down to consumers at the pump or on their heating bills. However, those costs would be temporary until the consumers are reimbursed.

"The tax needs to be returned to all American households as a dividend check," says Reynolds.

Reynolds believes a carbon tax is more viable than a cap and trade system, since it is more straightforward and the dividend aspect of it should give it more political legs.

There are currently two carbon tax bills in Congress, one in the House and one in the Senate.

The Climate Protection Act (S. 332) was introduced into the U.S. Senate last year by Sen. Barbara Boxer (D-CA) and Sen. Bernie Sanders (I-VT).

The bill would place a $20-per-ton fee on carbon and methane emissions on the first point of sale for fossil fuels and would rise by 5.6% every year. Of the money accrued, 60% of the revenue would be directly returned to citizens on a monthly basis via a dividend check, 25% would go toward reducing the national deficit, and the remaining 15% would be directed to fund renewable energy as well as weatherization projects for low-income households. A similar bill was also introduced to the House in March 2013 by Representative Henry Waxman, a California Democrat.

Though Reynolds thinks the Climate Protection Act is a good starting point, he is pushing for Congress to propose a tax that would allow 100% of its proceeds accrued to go straight back into the pockets of the American public.

On the state level, Massachusetts also has a carbon tax bill under consideration (H.2532), which would impose a tax on certain carbon-intensive fuels and dedicate the revenue raised toward transportation investment.

Introduced by Democratic Representative Tom Conroy of Wayland and Democratic Senator Michael Barrett of Lexington, the Massachusetts bill would boost taxes on heating oil and firewood and gasoline (at 3.5 cents-per-gallon). However, the bill also proposes doubling the personal income tax exemption to offset any cost burden the carbon tax would have on the citizens of the Bay State.

Barrett believes an offset is a better way to get citizens on board with a carbon tax, since dividend payments might be perceived as a government handout and turn people off. Barrett also thinks it is important to appeal to people's sense of morality over money concerns when it comes to addressing climate change.

"We need to impress upon people that if we don't do something soon, the world is going to burn up," says Barrett.

But not everyone agrees with the tactics in Barrett's bill.

"We need a revenue neutral bill where everything is returned to U.S. citizens," says Gary Rucinski, the Boston chapter leader and northeast regional coordinator of the Citizens Climate Lobby, and the founder and chairman of The Committee for a Green Economy, which is currently pushing to have its own carbon tax proposal put on the Massachusetts state ballot for 2016.

The Committee for a Green Economy commissioned the consulting firm, Regional Economic Models Inc., to analyze the economic effects their envisioned state carbon tax would have in Massachusetts. The study found that a carbon tax could spur the state's economic activity by as much as $8 billion over the next 20 years.

REMI also contracted with the CCL to analyze their proposed federal carbon tax and assess its impact on the U.S. between now and 2025.

REMI concluded that such a tax with a 100% return dividend to the public would not only result in a 33% reduction in carbon emissions, but contribute to the creation of 2.1 million jobs.

"Today fossil fuels are cheap," says Rucinski. "A carbon tax would send a clear signal to free market that we should be investing in better alternatives."

--Written by Laura Kiesel for MainStreet

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