Commentary

Jonathan Elwell: An effective plan for carbon pricing

Editor’s note: This commentary is by Jonathan Elwell, who is from Brattleboro and a junior political science/international relations major at Carleton College in Minnesota. He volunteers as a campus representative for Our Climate, a carbon pricing advocacy group.

[C]limate change debates are often framed in the context of tipping points — temperature benchmarks where global warming and all its effects will accelerate and become significantly more difficult to mitigate or reverse. Fortunately, we now find ourselves at a significantly more hopeful juncture — a tipping point of opportunity, rather than despair. Carbon pricing is both economically and environmentally beneficial, creating an opportunity to reduce emissions and strengthen our economy.

The 2018 legislative session presents Vermont lawmakers with the chance to make substantive, positive change. The ESSEX Plan’s (Economy Strengthening Strategic Energy Exchange) proposed price on carbon would induce significant reductions in greenhouse gas emissions and accomplish this environmental progress in a socially responsible manner with significant economic benefits.

The ESSEX Plan proposes that fossil fuel companies pay a gradually increasing price for each ton of carbon pollution contained in their product. The goal of this tax is to shift the cost of carbon pollution from society to the businesses that profit from these products. The ESSEX Plan’s suggested tax would begin at $5 per ton (about four cents per gallon of gas) and then rise by $5 each year before remaining steady at $40 per ton. This $40 figure is based on the EPA’s social cost of carbon, determined during the Obama administration as a comprehensive estimate of the monetized damages resulting from climate change.

The plan will bring direct environmental benefits through reduced emissions and local pollution, but what makes it especially sensible and beneficial for individual Vermonters right now are the secondary economic effects and responsible distribution of rebates and rate reductions. The revenue will go toward electric rate reductions across the board and additional per-person rebates for citizens in rural areas and lower income brackets. The rate reductions apply to all electric customers — both residential and commercial – and are estimated to cut electric costs by over 25 percent. There will then be a per-person rebate for Vermont families whose collective income is less than $90,000, with additional rebates for rural Vermont families making less than $150,000. These fair and significant dividends are hugely important and ensure that the bill has immediate benefits for households in all corners of the state.

The plan will increase growth in Vermont’s renewable energy sector as customers seek alternative sources of power which will be cheaper and more reliable than oil and gas. Vermont’s only revenue from the fossil fuel industry comes at the tail end of the market through low-wage distribution jobs. In 2013, about 80 percent of the $2.3 billion spent on petroleum products left the state. The renewable energy sector, however, currently employs 20,000 Vermonters and is growing 10 times faster than the economy as a whole. And because the entire supply chain can occur within the state’s borders, all of the revenue stays with Vermont families. This is the sector on which to build our 21st century economy.

The main criticism of the ESSEX Plan is that Vermont cannot do this alone, that we will not meaningfully reduce emissions and will harm our economy in the process. If these assumptions were true, I would agree that a price on carbon does not make sense for Vermont. But the ESSEX Plan will significantly help, not hurt, our economy. The plan will spur growth in renewables, which will keep energy revenue in Vermont, while using rebates to support lower-income and rural citizens who may be less able to adapt to oil and gas price shocks. The plan also understands that some heavy equipment in industries like agriculture and construction have no immediate fossil fuel alternatives and exempts them from the tax. Finally, New Hampshire, Massachusetts, Connecticut and Rhode Island are all considering similar bills (which reach the same $40 per ton limit), so by the time the tax ramps up, businesses and individuals would have no incentive to leave the state in pursuit of lower prices.

2017 was a terrible year for climate change in the United States. We saw the growing power and frequency of natural disasters across the nation, with California’s largest ever wildfire burning as I write. But as the federal government has denied climate change and dismantled regulations aiming to address it, leaders from state and local governments and the private sector have picked up the slack. The ESSEX Plan presents lawmakers with the chance to build on this momentum and show that Vermont will be an exemplar for courageous, sustainable governance.


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