While the Trump administration continues to consider a withdrawal from the Paris agreement, climate action in the United States is increasingly falling to the state and local level. And now, a handful of states, mainly clustered in New England, are turning to the concept of carbon pricing with a renewed sense of urgency.
Legislators in at least five states, including Massachusetts, Rhode Island, Connecticut, Vermont and Washington, have recently introduced proposals that would reduce greenhouse gas emissions by placing a price on carbon in the form of a tax or fee. For most, this is at least the second time such legislation has been proposed. But with a growing national interest in carbon pricing schemes — including from some Republicans in Congress — sponsors say they’re growing more optimistic about their proposals.
Carbon taxes aim to drive down greenhouse gas emissions by placing a tax or fee on either fossil fuel products or emissions — things like gasoline. It’s one of two major forms of carbon pricing, the other being a cap-and-trade system, which places a limit on the amount of carbon emissions industries can produce and establishes a market for the buying and selling of emissions permits.
There are two major cap-and-trade systems operating in the United States, one in the state of California and one regional cooperative system involving nine northeastern states. But so far, no carbon tax has ever been established at either the state or federal level in the country.
Now, leading the momentum in the Northeast is Massachusetts, where two separate carbon pricing bills — one in the House and one in the Senate — have a combined total of 80 sponsors, or about 40 percent of the state legislature. That’s 32 more supporters than a similar proposal garnered after it was introduced in the state in 2015.
Success in Massachusetts could pave the way for success in other states. Both Rhode Island and Connecticut have included language in their own carbon-tax proposals making the legislation contingent on whether the Massachusetts carbon-tax bill goes into effect.
“Last year was an educational opportunity,” said Rebecca Morris, communications director at the Massachusetts Campaign for a Clean Energy Future, which supported both the previous proposal and this year’s new ones. “People were still learning about the concept, they were learning about the bill.”
The previous bill met its end last year after its sponsor decided not to push forward with it, Morris said. But the increased support for this year’s carbon-pricing legislation is a testament to a growing awareness of the concept, she suggested.
Lessons from past carbon-tax attempts
Economists have long argued that a carbon tax is likely one of the most effective means of reducing greenhouse gas emissions. And the strategy has seen success in other places. A carbon tax established in the Canadian province of British Columbia in 2008 has been widely hailed as one of the most successful examples of a carbon pricing scheme worldwide.
However, the idea has been slow to gain support in the United States, although awareness has grown significantly in the past few years. In 2015 and 2016, several states, including Massachusetts, saw carbon pricing bills introduced, and a carbon-tax proposal in Washington state made it all the way to the ballot in last November’s election, although it ultimately failed to pass.
A major reason for the Washington bill’s failure involved a fierce controversy among environmentalists over how the tax’s revenue should be used. The legislation was designed to be revenue neutral, meaning it wouldn’t produce any additional income for the state — instead, the extra money raised from the carbon tax would be used to lower the state’s sales tax, as well as to fund a rebate for low-income families. However, some environmental and social advocacy groups felt that some revenue from the tax should be used to fund clean energy investments and other social and climate-related projects — and for this reason, some groups ultimately decided not to support the legislation.
In Massachusetts this year, one of the proposed carbon-pricing bills is revenue-neutral and the other is not, tackling both sides of the potential revenue debate. Both bills propose a fee starting at $10 per ton of carbon dioxide and rising by $5 a year until it hits a cap of $40 per ton. But a bill introduced by state Sen. Mike Barrett would return 100 percent of the carbon fee’s revenue back to households and businesses, while a bill proposed by state Rep. Jennifer Benson would use 20 percent of the revenue to fund green infrastructure and clean energy investments.
The two bills share many overlapping sponsors, although Barrett’s bill has a few more supporters. That said, Barrett told The Washington Post, “I’ll take a carbon price either way.” For now, both bills remain in their earliest stages and have been referred to the Joint Committee on Telecommunications, Utilities and Energy, which is chaired by Barrett.
A carbon tax bloc in the northeast?
Meanwhile in Rhode Island and Connecticut, the chances of a future carbon tax have also been pinned to the success of the Massachusetts legislation.
Connecticut’s bill states that its provisions shall take effect upon “Massachusetts and Rhode Island enacting a fee on fossil fuels sold in said states at a rate of not less than ten dollars per ton.” And in Rhode Island, the bill is dependent on a neighboring state with “an aggregate population of at least five million (5,000,000) persons” enacting similar legislation. Massachusetts is the only bordering state that exceeds this population, and the other border-sharing state is Connecticut.
According to the Rhode Island bill’s sponsor, state Rep. Aaron Regunberg, the clause was born of concerns about Rhode Island potentially putting itself at a competitive disadvantage if it were to become the only state with an implemented carbon tax.
“Understanding the strength of those concerns, we included trigger language and we’ve been working with folks in Massachusetts and Connecticut and other states to try to be pushing this forward together,” he told The Post.
It’s an attitude reminiscent of the cooperative spirit that resulted in the Regional Greenhouse Gas Initiative, the northeastern cap-and-trade system that already includes Rhode Island, Massachusetts and Connecticut, as well as Delaware, Maine, Maryland, New Hampshire, New York and Vermont. In fact, because the RGGI already addresses emissions from the power sector, Morris noted that the new carbon-tax proposals make an exemption for the electricity sector.
Another chance in Washington state?
For its part, Washington state — still recovering from the defeat of last year’s proposed legislation — has already seen four new carbon-tax bills proposed by various state legislators this year, all of which are in early stages as well. And state Rep. Diana Gonzalez of Vermont recently introduced a carbon-fee proposal that she’s described as a “conversation starter.”
Indeed, the emergence of these proposals across the nation may be taken as evidence that the conversation has already begun — and more lawmakers are beginning to join it. Even at the federal level, a surprising interest in carbon pricing has begun to surface among conservative policymakers, who have generally been opposed to the idea in the past.
In February, a group of senior Republican officials, some of whom had previously served in high-ranking positions in the Council of Economic Advisers, met with Trump administration officials to propose the idea of using a federal carbon tax, rather than top-down regulation, to address the issue of climate change. The idea quickly received endorsements from other notable Republican lawmakers, including Mitt Romney.
The White House has since stated it is no longer considering the proposal — but its newfound acceptance among some Republicans was a point of hope among environmentalists and additional testament to the idea that carbon pricing may, one day, lead the future of climate action in the United States.
For now, though, hopes for the first U.S. carbon tax remain pinned at the state level. The Carbon Tax Center suggests that seven states — Massachusetts, Washington, Connecticut, Hawaii, Maryland, Illinois and New York — and the District of Columbia have the greatest potential to be the first in the nation to implement such legislation. The analysis is based on factors like the states’ vulnerability to climate change impacts, voter concern about the issue, state-level renewable energy initiatives and any legal, ideological or economic challenges that could prevent the legislation from moving forward.
While Massachusetts has made some strides in terms of support this year, the legislation’s future still remains uncertain. According to Barrett, such proposals can have as long as an “eight-year lifetime,” requiring several years just to raise awareness and drum up support for the issue. This is the second year he’s introduced his proposal, but he says he’s growing more hopeful.
“I’m making my way slowly, but I think successfully,” he said. “And my hope is that the Senate, at least, will act in this 2017-2018 session. Then the pressure really builds on the House, the other branch — the more conservative branch, I might add. I think they want to see the Senate take the first step.”