Confronting the climate crisis shouldn’t be rocket science—to push society to decarbonize, just treat greenhouse gases the way governments treat liquor and cigarettes: Raise the price. With the climate-change movement at an impasse as the Paris climate treaty clashes with Trump’s anti-science agenda, the bottleneck around carbon policy today is more political than technological. And despite Trump’s rejection of the Paris Treaty, the global backlash shows that even the economics are coming around.
A new state-by-state analysis by the Carbon Tax Center (CTC) shows that carbon taxation, while often dismissed as a political nonstarter, could actually be a common-sense policy measure for local communities. A carbon tax could build on global momentum toward decarbonization while at the same time boosting public coffers, reducing inequality, and providing a democratic mechanism for a public reckoning with the true cost of pollution.
The idea of a carbon tax is financially elegant: Make each ton of carbon cost more to burn. The idea of a pollution levy is simultaneously progressive—it targets polluting industries and redistributes their wealth downward—but it can also work within the structures of a “free market” economy, by regulating social costs to encourage energy transition across the supply chain, starting with electricity plants and down to the gas pump.
Coupled with support for the growing renewable-energy sectors, a comprehensive carbon tax would ideally provide complementary sticks and carrots to mainstream renewable energy and phase out coal. But so far no state has implemented a carbon tax, and emissions-reductions targets on the state level have led to plans for more business-friendly “cap and trade” market schemes rather than straight taxes.
Congress has seen some proposals for carbon taxation in recent years, but given the chaos in Washington, the CTC turns to the states to spur localized efforts both to limit fossil-fuel use and expand green-energy production instead.
Massachusetts, Rhode Island, Connecticut, Vermont, and Washington have recently considered carbon-tax legislation, and residents in other states have campaigned for carbon-pricing ballot measures. The CTC report estimates that Connecticut, Hawaii, Illinois, Maryland, Massachusetts, New York, Washington, and the District of Columbia are the most promising localities for instituting carbon taxes. The political prospects are driven by technological advancement as well as market forces and consumer pressure, along with the regional emissions-target framework set by California and a coalition of Northeastern states.
According to a Brookings Institution analysis, a carbon tax of $20 per ton of emissions could bring in billions in revenue, and, depending on the state’s population, might even support a significant portion of state budgets. For example, California alone could yield more than $7 billion, though this would only be about 0.3 percent of the state’s annual budget.