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Carbon Pricing in Three Paragraphs

Most economists agree that putting a price on carbon is a more efficient way to reduce emissions compared to other policies. (Here’s a good source for that).  This would be done with a fee or a tax that makes dirty energy more expensive plus a rebate or dividend to get the money back. For example, gasoline and fuel oil prices would go up, and we’ll drive less or drive more efficient cars, and weatherize our homes. And the people paying the fee or tax (us!) would get the money back, so it’s a fair policy and doesn’t hurt citizens, businesses, or other institutions like hospitals or churches. Putting a price on carbon is being tried in 19 countries around the world and in 5 other states. One place where there’s evidence how well it works is British Columbia where it was introduced in 2008. The economy is doing great, and carbon emissions are dropping.

We now have two bills in MA to put a price on carbon: SD 1815 introduced by Sen. Pacheco, and SD 285 introduced by Sen. Barrett. (Sen. Pacheco is the Chair of the Senate Committee on Global Warming and Climate Change). There are differences between the bills. Barrett’s bill is revenue neutral. It uses a rebate to give back all revenues raised by the policy to households and organizations. Pacheco’s bill is revenue positive – it sets aside 20% of revenues to spend on clean energy and public transportation. It gives the other 80% back to residents. Barrett’s bill also has more details. His strategy is to keep the bill from being labeled “a tax” while having enough details so it appeals to specific interests like labor, businesses, and advocates for the disadvantaged. Sen. Pacheco’s strategy is different. He wants to have a lively debate among legislators and the public about the best policy choices before nailing down the details. To support this debate, he’s planning a series of statewide public forums.

350Mass and Climate XChange recently formed the Massachusetts Carbon Pricing Coalition to get a bill passed. While Climate XChange has publicly supported Sen. Barrett’s bill, the coalition now is promoting a dialogue so the best legislation will emerge. Two points here: First, the coalition is organizing house parties around the state to get these dialogues going. Second, the coalition has a set of principles to guide the legislation so when all is said and done, the law actually reduces GHG emissions; is fair to households, businesses, and institutions; and strengthens the Massachusetts economy.  These principles are: (1) Have a big enough fee/tax rate to achieve the GWSA targets (25% reduction by 2020); (2) Phase-in gradually to allow people time to adjust; (3) Deal with all major sources of emissions: (4) Make sure low and moderate-income households receive at least as much money back in rebates or tax cuts as they pay in carbon fees/taxes; (5) Protect business competitiveness; (6) Provide additional help to vulnerable households (like people who have  to drive a lot more than average because of where they live or work); (7) Further protect all sectors (residents, businesses, and institutions like hospitals, churches, etc.); and (8)  Use some of the revenues for government programs that meet essential public needs, reduce greenhouse gas emissions, and create jobs.

That’s the three paragraph summary. Maybe it answers some of your questions. Maybe it raises some more! Look for information in later newsletter articles about house parties and meet-ups where you can talk about pricing carbon – and make it happen!