Move forward with carbon tax
By Susan Secord
Last week, hundreds of us streamed into two large conference rooms in the Denver EPA headquarters to speak for five minutes each on the proposed Clean Power Plant Rules. Three EPA officials sat in each room and attentively listened to people who had come from all over the western United States to weigh in on the Obama administration’s attempt to rein in emissions from existing power plants, the biggest single source of CO2 emissions in the country. There were well thought-out, impassioned speeches from many points of view. Coal miners, utility employees and railroad workers were concerned about the viability of their own jobs and profits while health care providers, environmentalists, and a range of citizens were equally concerned about the impacts of emissions on public health, the environment and the viability of life on Earth for themselves and future generations.
In response to President Obama’s directive, the EPA’s Clean Power Plant Rules establish regulations with the goal of reducing emissions from existing power plants to 30 percent below 2005 emissions by the year 2030. Since the Supreme Court has ruled that the Clean Air Act not only gives the EPA the right to control carbon emissions but it also requires the EPA to do so, these regulations are long overdue.
It should be noted that emissions from power plants represent about one third of the CO2 emissions in our country. The proposed regulations do not address transportation, residential, commercial, agricultural, or industrial emissions. So these standards should be seen as a minimal good start. Also, according to most accounts, we have already dropped our power plant emissions by 13 percent since 2005, and we have about 15 years to drop by another 17 percent. So we are well on our way to reaching this goal.
The EPA proposes to give states choice in how to meet the standards, and states can reduce emissions at the power plants or through offsets that are outside the fence of the power plant but within the state.
Among economists, a carbon tax is widely accepted as the most economically efficient and cost-effective way to reduce CO2 emissions. Though directed at reducing CO2 emissions, carbon taxes can also help states reduce other fossil fuel byproducts, including particulates and mercury.
Detractors who argue against a carbon tax say it will kill jobs, drag down the economy and burden families with higher energy bills. But a well-designed carbon tax that recycles revenue back to households and into the economy would protect families from rising costs and actually add jobs. A recent study by Regional Economic Models, Inc. (REMI) found that a carbon tax in California would increase GDP and add hundreds of thousands of jobs while significantly reducing CO2 emissions, provided the revenue is returned to the public, either as tax cuts or direct payments. Other states could achieve similar benefits. REMI also just released a 20-year analysis of the impacts of a gradually increasing national revenue-neutral carbon tax. That study showed that under such a plan the United States would reduce CO2 emissions to 50 percent of 1990 levels while simultaneously adding $1.375 trillion to the GDP and adding 2.8 million jobs. Real income would increase and premature deaths would decrease by 227,000.
It should be noted that Regional Economic Models, Inc. is a highly regarded non-partisan consulting organization that has been in business for 30 years. Their clients include 47 state governments, cities, towns, Fortune 500 companies and organizations such as the American Gas Association, the Nuclear Energy Institute, and the National Federation of Independent Business. REMI approached the study from a purely economic point of view; they had no pre-conceived agenda for how the study would turn out.
The experience of British Columbia, Canada gives a real life example of how a gradually increasing revenue-neutral carbon tax can work at a sub-national level. Since passing the tax in 2008, British Columbia has significantly reduced its CO2 emissions while strengthening its economy.
The evidence from the REMI studies and from British Columbia’s experience shows that we don’t need to choose between reducing greenhouse gases and a strong economy. We can have both. The EPA should allow for a state carbon tax as one option for states to reach their goals. If the carbon tax is revenue-neutral, Colorado and other states will surpass their CO2 emission reduction goals while adding jobs and strengthening their economies.
Susan Secord is with Citizens’ Climate Lobby – Boulder.