Perhaps, Some Day, There Will Be a Carbon Tax

There are few people left, at least in my orbit, who don’t share the goal of prompt decarbonization of the economy.  The quaintly named $64,000 question ($64 trillion question?) is how we get from here to there.

Today, the New England Power Generators Association released a report prepared by Analysis Group that explains how an economy-wide price on carbon can help New England do just that.  (Full disclosure:  Foley Hoag has done work for NEPGA and my wife works at Analysis Group, though not on this project.)

As a long-time carbon tax supporter, I did not need to be sold, but the report still has some important conclusions.

  • A carbon price of $25-35/ton in 2025 and $55-70/ton in 2030-35 would be sufficient to put us on a path to meet our GHG reduction targets.
  • Electrification will reduce household energy costs such that, even including the price on carbon, such costs will be lower in 2035 than without electrification.
  • The only means to get on a pathway towards attaining region-wide carbon reduction goals is to combine “high electrification” with carbon pricing.
  • Existing fossil fuel generators will still be necessary for “at least the next one to two decades” for load management.

So, the way to get to a decarbonized economy in New England is to price carbon.  We still have to answer one more question:  how do we build sufficient support for pricing carbon that it becomes a political reality?

3 thoughts on “Perhaps, Some Day, There Will Be a Carbon Tax

  1. There’s another question, or at least a very important extension to the “one more question” as stated above: How do we build sufficient support over enough political jurisdictions to make an actual impact on the required scale? Science tells us that emissions of CO2,methane, and other greenhouse gases are problematic at the global or near-global scale. So, whatever is done in New England is fine, but nowhere near enough. Today’s political reality at the grand scale (e.g., US, Brazil) is, to say the least, not encouraging.

  2. We found an answer to your question in New Hampshire: rebate all the money collected from the carbon fee back to all households on an equal basis. When you do that, most families come out ahead, and everyone’s purchasing power is protected. It’s an efficient way to reduce emissions, it’s fair, and it doesn’t grow government or increase taxes. That combination makes it politically viable, durable once in place, and beneficial to low and middle-income households.

    People will actually want a higher price on carbon because most will come out further ahead the higher the carbon price goes.

    The NH Carbon Cash-Back Coalition put the question to voters in 41 town elections this year. Of the 36 towns that have voted so far, 26 passed “A New Hampshire Resolution to Take Action on Climate Pollution” that called for legislation of the Carbon Fee and Dividend approach at the state and federal levels. You can find full election results on the bottom of carboncashback.org and the resolution text on the Files page at that site. See the Benefits page for why the cash-back approach is becoming popular and the Carbon Cash-Back page for policy details.

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