Making the Case for a CO2 Charge on a Snowy Day in MA

In the Press · February 24, 2015

What if you could receive an annual check from Massachusetts for simply reducing the amount of fossil fuel you use? On February 4, 2015, Prince Lobel hosted a panel discussion with the New England Women in Energy and the Environment (NEWIEE) to discuss this question and the proposed legislation by state Senator Michael Barrett, which would do exactly that. Sen. Barrett was joined on the panel by Tufts University Professor of Economics Gilbert Metcalf, and Wayne Davis of Harvest Power, Inc. The panel was moderated by Zaurie Zimmerman of Zaurie Zimmerman Associates, Inc. The timely topic drew a great crowd despite the winter weather and the Patriot’s Duck Boat parade earlier that day.

What is Carbon Pricing?

Under Senator Barrett’s proposed legislation, An Act Combating Climate Change – SD285, a “carbon charge” would be added to the price of each coal, petroleum and natural gas fuel in proportion to the CO2 thrown off as a byproduct. The CO2 charge, which is endorsed by Prof. Metcalf and Mr. Davis, is not a tax, but instead is “revenue neutral.” The goal is not to generate revenue, but to encourage individuals to be more thoughtful about their use of fossil fuels. The Act provides that each state resident would receive an equal share of the total CO2 charges collected in an annual or quarterly check. Households could then spend some of this rebate money improving the energy efficiency of their homes and vehicles, and using cleaner, renewable energy instead of fossil fuels. A sliding price scale means the CO2 charge can be lowered by switching from coal to oil, from oil to natural gas, or, ideally, natural gas to a renewable energy source like solar or wind power.  Massachusetts businesses and other entities would receive a rebate in proportion to their share of total employment in the state, though additional rebates would be provided to businesses that are energy intensive and face significant competition outside of Massachusetts.

What are the Impacts?

The most important impact is that the Act would cut CO2 emissions more substantially than any other existing or proposed regulatory policy. In addition, low and moderate income households would get back at least as much as they pay for higher costing fossil fuels. The Act would save billions of dollars spent on imported fossil fuels, leaving more money for creating and expanding Massachusetts businesses and increasing employment.

Why Massachusetts?

Massachusetts state law requires that we cut greenhouse gas emissions (primarily CO2) to 25% below 1990 levels by 2020 and to at least 80% below 1990 levels by 2050. This will require a dramatic shift from fossil fuels to clean energy such as solar and wind, while greatly improving the efficiency of our energy use. Carbon pricing has already by tried and tested – and proven to work – in British Columbia since 2008. The money from carbon pricing has gone back to the public, repeal efforts have failed, and the system is popular. With lessons learned from British Columbia, the panelists believe that Massachusetts is ripe for implementing the carbon pricing system.

This blog was prepared by Julie Barry and Cailin Burke. For more information, see the attached materials from the event, or contact Julie, a partner in the firm’s Renewable Energy Practice Group, at jbarry@princelobel.com, or 617 456 8090.

Carbon Tax Panel Discussion materials