Memo – NYS Carbon Tax

Memo of Support
Enact a Carbon Tax in NYS
(A107 Cahill/ S2846 Parker)

Climate change is a serious problem in NY. One of the biggest obstacles to transitioning to clean energy is that the market prices of coal, oil and gas don’t include the true costs of carbon pollution. A carbon tax also encourages alternative energy by making it cost-competitive with cheaper fuels.

The carbon tax would start at $35 a ton and then increase in annual increments of $15 a ton. 60% of the revenues would be rebated to low and moderate income consumers. The remaining forty percent will support the transition to one hundred percent clean energy in the state, to support mass transit to reduce carbon emissions, and to improve climate change adaptation. Such funds shall include payments and subsidies for renewable energy, energy conservation and efficiency measures, improvements in infrastructure, improvements in mass transit capacity, agricultural adaptation measures, protection of low-lying areas including coastlines, and emergency responses to extreme weather events.

“Carbon-based fuel” means coal, natural gas, renewable biomass, petroleum products, and any other product that contains carbon and emits carbon dioxide, methane, nitrous oxide, or other greenhouse gases when combusted, that are used for fuel, heating, cooling, or industrial processes, which processes shall include electricity generation.

A carbon tax is an “upstream” tax on the carbon contents of fossil fuels (coal, oil and natural gas) and biofuels. A carbon tax is the most efficient means to instill crucial price signals that spur carbon-reducing investment. A carbon tax can also be used to recapture some of the costs pushed on to taxpayers and consumers from burning fossil fuels, such as the $30 billion added annual health costs in NYS to deal with air pollution and fossil fuels and the tens of billions of dollars of damage from climate change (e.g., severe weather)

Unlike cap-and-trade, carbon taxes don’t create complex and easily-gamed “carbon markets” with allowances, trading and offsets. An upstream carbon tax levies a tax according to the amount of carbon dioxide emitted by each fossil fuel. The cost of the tax is then passed along to consumers and producers as fossil fuels and energy intensive goods and services become costlier. If the carbon tax is effective, goods and services which are less energy intensive will become more affordable than those which release larger quantities of carbon dioxide into the atmosphere.

NY’s present cap and trade program (Regional Greenhouse Gas Emissions) only prices carbon at around $5 a ton.

Polls show that a plurality (60%) of all Americans, including Republicans, support a carbon tax if the revenues are used for renewable energy. The 100% fee and dividend approach still receives majority support (56%) from all voters but not from Republicans (43%).

Boulder CO enacted a carbon tax on electricity in 2007. British Columbia in Canada instituted a carbon tax in 2008. A recent report found that since the carbon tax was started, the local economy has done better than the rest of Canada while reducing fossil fuel emissions. England, Scotland, Wales, Finland, Ireland, Chile, and Sweden have also enacted a carbon tax. While a national carbon tax would be easier to administer, it is unlikely that Congress and the Trump administration will agree to act in time to prevent catastrophic climate change.

The States of Oregon. Massachusetts, Vermont. Rhode Island, Connecticut and Washington are presently considering carbon taxes.

Green Education and Legal Fund,