Washington’s Carbon Tax: Don’t Let Perfect Derail the Good
November 7, 2016
I-732 is the designation of the Carbon Tax initiative on the Washington State ballot, that has drawn surprising resistance from some folks that should know better.
I-732 has split the environmental community, as we reported last week. Some climate activists and scientists like James Hansen support it as a way to make polluters pay and start fighting climate change. Others, like Jones and Klein, oppose it, arguing, among other things, that it’s a “corporate giveaway” because it would lower a manufacturing tax.
Many corporations don’t seem to appreciate the gift, though. Koch Industries has donated $50,000 to the No on 732 campaign. In total, manufacturers, utilities, oil industry groups, and other big business interests have pumped more than $1.3 million into a campaign to defeat the measure, much of it in the last few weeks.
Never thought we’d see Naomi Klein and the Koch brothers on the same side of anything — but, hey, stranger things have happened the epic election cycle of 2016.
If someone’s throwing you a life preserver, you might not want to dither about the color.
Wake the hell up, people. Remember “There’s not a dime’s worth of difference between Al Gore and George Bush”?
Same impulse that demonized Obama, Gore, and now Hillary – might torpedo Washington’s experiment in carbon pricing.
The backers of I-732 are running on a pessimistic platform of “just do something,” preying on the real urgency that so many of us feel in the face of the climate crisis. But sometimes “something” is worse than nothing, especially if it will stand in the way of better proposals down the road.
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.
“Don’t let the perfect be the enemy of the good,” I-732 proponents like to say. It sounds good, but it is not what opponents of this initiative are doing. “Perfect” is not on the table—we lost that option when climate action was delayed for decades. So much time has been lost, in fact, that now we have just one shot to get the policy right. And that means we can’t let the politically difficult be the enemy of the scientifically and socially necessary.
This would probably make sense in a perfect world where we were about to apply a national and international price on carbon, but barring a completely unforeseen realignment in Tuesday’s election, we aren’t.
We’re going to continue to move forward through the momentum of a thousand grassroots efforts in places as diverse as Germany, New England, and Alberta.
Until there is a strong, overwhelming will to apply a price on carbon nationally, and a clear idea of what that looks like, Statewide efforts in the laboratories of democracy, like New England’s Regional Greenhouse gas initiative, California’s Cap and Trade Program, and carbon levies in British Columbia and Alberta are the Petri dishes where we will not only prove out what works, but continue to send a message, wave after wave, that a price on carbon not only makes sense, but helps keep economies strong, diverse, and moving into the 21st century of renewable and sustainable technologies.
The nation’s first carbon market – the Regional Greenhouse Gas Initiative (RGGI) – is a huge success for the public’s health, the environment, and the economy, according to a new report released today. RGGI states – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont – have reduced carbon pollution by one-third, while saving consumers $1.5 billion on their utility bills, creating over 22,000 additional jobs, and bringing $2.9 billion in additional economic benefit to the region since it began in 2008.
Today’s Analysis Group’s report updates its 2011 examination of the first three years of RGGI. Like the study of RGGI’s earlier years, they found that the initiative produced net benefits to consumers, state governments, and individual state economies. In fact, as the program has matured, states have better maximized the benefits and developed tools to successfully mitigate consumers’ costs. In particular, states have increased reinvestment in state energy efficiency programs and other clean energy programs – reinvestment that “stands out as the most economically beneficial use of emission allowance revenues.” RGGI is proof that states can reduce carbon pollution – taking action against climate change, the greatest environmental, public health, and humanitarian threat of our time – and economically prosper from it.
With EPA expected to release its final plan for cutting power plant pollution, other states should follow RGGI’s lead and embrace and expand clean energy policies in a market-based system. With carbon pollution down over 30 percent with help from RGGI, we know it works as designed to combat climate change–and today’s report helps highlight the many collateral economic benefits it can deliver states at the same time.
Clean Energy is the Driver of RGGI’s Success
For the most part, states have used RGGI revenues to build on the region’s many established clean energy programs to further expand these critical complementary policies, such as portfolio standards requiring specific amounts of energy efficiency and renewable energy in serving utility customers, and clean energy financing mechanisms. These reinvestment decisions are key to RGGI’s success.
RGGI states are national leaders in energy efficiency – the top three performing states (achieving savings from smarter energy use that are greater than 2 percent of their utilities’ total sales) are all in RGGI. Between 2012 and 2014, energy efficiency investments, driven both by state policies and the reinvestment of RGGI proceeds, helped reduce customer electricity bills by $341 million and natural gas bills by $118 million. In addition, energy efficiency has further reduced the region’s electricity and heating bill by suppressing wholesale electricity prices.
Renewable energy as a percent of total electricity generated has doubled since RGGI began, spurred by renewable portfolio standards (RPS) and expanded clean energy financing programs for municipalities, public institutions, and interested residences and businesses. The growth in in-state renewable energy development has helped the RGGI states reduce out-of-state fossil fuel purchases by $1.27 billion over the last three years. Renewable energy also has been integral in improving the region’s energy security and resiliency. The carbon allowance market, in tandem with complementary polices, has driven the development of robustclean energy economies and boosted homegrown clean energy jobs across the region.
The latest numbers from Statistics Canada show that B.C.’s policy has been a real environmental and economic success after six years. Far from a being a “job killer,” it is a world-leading example of how to tackle one of the greatest global challenges of our time: building an economy that will prosper in a carbon-constrained world.
B.C.’s tax, implemented in 2008, covers most types of fuel use and carbon emissions. It started out low ($10 per tonne of carbon dioxide), then rose gradually to the current $30 per tonne, which works out to about 7 cents per litre of gas. “Revenue-neutral” by law, the policy requires equivalent cuts to other taxes. In practice, the province has cut $760-million more in income and other taxes than needed to offset carbon tax revenue.
The result is that taxpayers are coming out ahead. B.C. now has the lowest personal income tax rate in Canada (with additional cuts benefiting low-income and rural residents) and one of the lowest corporate rates in North America. You shouldn’t need an economist and a mining entrepreneur to tell you that’s good for business and jobs.
At the same time, it’s been extraordinarily effective in tackling the root cause of carbon pollution: the burning of fossil fuels. Since the tax came in, fuel use in B.C. has dropped by 16 per cent; in the rest of Canada, it’s risen by 3 per cent (counting all fuels covered by the tax). To put that accomplishment in perspective, Canada’s Kyoto target was a 6-per-cent reduction in 20 years. And the evidence points to the carbon tax as the major driver of these B.C. gains.
In truth, carbon emissions have fallen faster in California than anticipated, reducing the demand for emissions allowances and highlighting the achievements of the state’s overall strategy to reduce pollution. California has been a national and global leader in pioneering smart and workable environmental solutions that produce real results. And that tradition is continuing with its cap-and-trade efforts.
The results of the May auction show that the state’s emissions pricing mechanism adapted beautifully to the reduction in the demand for allowances. The program sets a minimum price, below which allowances will not be sold. So when demand for allowances falls (which means fewer are sold and even less greenhouse gas will be emitted), the gains are realized for the environment rather than in falling prices for permits to pollute. Some earlier carbon trading programs — including the largest one, set up by the European Union — do not have a minimum price. That has threatened the efficacy and stability of those efforts.
Somehow, “just do something” sounds like a great idea to me.
Some states and provinces have, and it’s working out, and teaching us things. I’m struggling to find the down side of that.