Action 134. Carbon is not priceless- let’s talk, and support, taxation.

Handing money to a cause is not something I like to focus on in too many of my climate change actions, because to me that’s not an action, other than the activity of picking up my check book. However, there are times when giving even the small amounts of money that the 99% of us can really can make a difference. When it comes to growing popular support behind new and important climate policies, grassroots donations really can be important. This week I gave to a new effort to introduce carbon pricing strategies as a public initiative – one I feel has real potential to make a difference in our state’s carbon emissions and continue to show how Washington can lead on effective emissions reductions strategies.

Carbon Washington is a new initiative spearheaded by economic whiz and really funny guy Yoraum Bauman. The goal of Carbon Washington is to get the state to take up a carbon tax that is revenue neutral and internalizes what are currently the very real but external costs of carbon. What I mean by this is that all of us pay for the energy we use, such as gas at the pump; however, that price we pay does not account for a lot of the actual environmental cost of that gas: the damage to natural resources and our climate that we do by extracting, transporting, and burning that gas. Its part of the reason that gas is as cheap as it is, because we aren’t paying for all that other stuff – yes, there are other parts, like OPEC and international speculation I won’t even attempt to delve into here, but the externalities of environmental impacts are a real issue that we don’t currently pay for at the pump. Except we are paying for it- with our and our planet’s health . Carbon pricing is an attempt to say, Hey, look, we need somebody (gas companies, and of course the consumers to whom many costs are passed forward) to pay for the actual costs of this gas that nobody is accounting for, so we can start to address some of these real impacts that fossil fuels are having. And with that price, just like we learned in Econ 101, comes an incentive to reduce demand and make supply more expensive- and thus the direct savings in emissions.

So how do you price carbon? Well, there are multiple ways to go about it, but two of the biggest are the Cap and Trade system, and a carbon tax. In cap and trade you set a ceiling for the amount of carbon that is permitted to be emitted, and then you allow for varying degrees of trading the allowed credits to pollute among businesses. In carbon taxation, the government sets a price per ton of carbon, and then translates that into a tax on gas, electricity, and/or oil depending on what’s covered under the tax. As I have written about before (Action 123) both of these approaches have their pros and cons, but I am tending these days to lean towards carbon taxation over cap and trade, because as most economists seem to agree, a carbon tax is simpler, more transparent, and less subject to the whims and internal politics of the cumbersome organization and political mechanisms that go with creating a cap and trade system.

However, one of the downsides carbon pricing is that as a tax, its cost tends to get passed on to consumers (which of course is what drives the decline in demand, which is part of the point of the tax, and hence unavoidable). Like many non-graduated taxes, this hits low-income people hardest, because the tax is a greater component of their income. Carbon Washington’s proposal helps to address this inequality in a couple of ways: it proposes that the revenues gained should be used to offset a couple of things, including taking a full percentage point off our sales tax (good for all Washingtonians, particularly, again, low-income folks hit harder by this regressive tax) and fund a working families rebate, which kicks some refunds back to low-income families. Also rolled into the mix is elimination of the business & occupation tax for manufacturers, which is likely to appeal to sectors of the business community.

Washington is certainly not alone in its efforts to price carbon. We are part of a regional partnership for climate action by the West Coast states and BC that have agreed to coordinate carbon reduction goals, including pricing. To our north, British Columbia has implemented a carbon tax and has seen emissions subsequently drop by 14% over pre-tax levels; while California has implemented a Cap and Trade system more similar to what the EU has now been doing for nearly 10 years (to varying degrees of success or failure depending on who you listen to, but that’s a whole ‘nother can of carbon). At a broader scale, the World Bank believes pricing carbon is likely to be the most economically efficient way of curbing greenhouse gas emissions.

Still, the climb is uphill, in fighting both politicians that do not see its urgency nor economic validity, as well as, of course, the fossil fuel manufacturers that do not like this idea one bit. Our governor, and indeed many politicians, seem to lean more at this point towards cap and trade (it is a more traditionally political solution, and it avoids the dreaded “tax” word). Carbon Washington recognizes the difficult political battle they have with the legislature, and so they are proposing to make carbon pricing a public initiative for the ballot in 2016. To do this, they will need to gather 300,000 signatures in the coming year (I see another Action opportunity in my future), and they are in the midst of grassroots fundraising to support this upcoming effort. So when they held a money bomb this past week to raise $10K to support their efforts- a modest goal achieved through many small donations- I jumped right in. And you can too, right here!

So keep your eyes peeled, Washingtonians, for an ask to put this public initiative on the ballot. And in the meantime, let’s start talking to our elected leaders about internalizing and accurately capturing the real costs of carbon through pricing.

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2 thoughts on “Action 134. Carbon is not priceless- let’s talk, and support, taxation.

  1. Pingback: Action 135. More encouragement on carbon pricing! | 350 Climate Change Actions

  2. Pingback: Action 154. Put a price on it! | 350 Climate Change Actions

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