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Collection: Carbon Pricing Introduction

https://www.sightline.org/series/carbon-pricing-introduction/

The Carbon Pricing Café

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Welcome to the Carbon Pricing Café! Do you have a reservation? Let’s see… oh yes, here you are: Washington State, table for 7 million. Right this way, please; we’ve got a spot for you by the window.

My name is Carbon Tax, and I’ll be your server today. You may know my twin sister, Cap-and-Trade, who sometimes covers for me. Some diners seem to have a strong preference between us, but in truth it really doesn’t matter that much; we can both deliver the goods.

(Besides, with all due respect to servers everywhere, when was the last time the most memorable part of a good meal was the service?)

We aim to provide a top-notch dining experience, and in order to do that our menu is limited. All we serve is carbon pricing, there are only a few really good entrées, and you only have to make two big decisions. (Remember, carbon tax and cap-and-trade are not entrée choices, and they don’t factor into the big decisions. People seem to forget that we’re your servers, not your meal.)

Two big decisions

Your first big decision is portion size: How high a carbon price do you want? Your answer will, of course, help determine how much carbon reduction you’ll get, but it will also help determine your carbon pricing revenue. (For the sake of comparison, a carbon price of $30 per ton CO2—as in British Columbia—will generate about $2 billion a year in revenue. A carbon price of $12 per ton CO2—as in California—will generate closer to $800 million a year.)

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Carbon Tax

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A carbon tax would levy a charge on the CO2 emissions from fossil fuels purchased for combustion in the state, as well as on the carbon content of electricity imported from other states. In Washington, a carbon tax of $30 per ton of CO2 would net an estimated $2.3 billion each year. The proceeds could be used to reduce taxes on families and businesses, or to provide funding for transportation, clean energy technology, or public education.

Washington State Carbon Tax

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A carbon tax has long been heralded as an economy-wide tool to curb greenhouse gas emissions. As the federal government continues to struggle in implementing comprehensive climate policy, leaders in Washington State have shown interest in a state carbon tax.

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