This week, the Massachusetts Senate may become the first legislative body in the United States to pass a carbon fee and rebate policy, one that would make carbon pricing economy-wide and provide impetus to similar proposals being considered in other states around the country.
The proposal, originally reflected in two separate bills, has been filed as an amendment to the so-called Energy Omnibus Bill now moving its way through the legislature. Even if the amendment eventually is omitted in negotiations with the Massachusetts House of Representatives this year, it is a big deal.
If the Massachusetts Senate passes this amendment, it will signal that climate change politics-as-usual is starting to break down, that politicians are getting the message that their constituents want smarter, more effective, and more urgent responses to the climate crisis that is threatening our collective future.
Currently, neither Massachusetts nor other states are on track to sufficiently reduce the greenhouse gas emissions that are causing global warming. Massachusetts, California and other states have been leaders in implementing significant programs to reduce emissions in different sectors, improve energy efficiency, and increase renewable energy … but it has not been enough.
As almost everyone has acknowledged, even more insistently since the Paris COP21 conference, the single most effective policy against climate change is carbon pricing – charging fossil fuel importers a fee based on how much carbon dioxide pollution a fuel releases when burned. Among available policies, carbon pricing delivers the biggest bang for the buck in reducing emissions and strengthening economies based on local, more reliable renewable energy, and it makes every other policy more effective by generating clear market signals in the right direction.
Carbon pricing accomplishes several goals at once. It corrects what economists across the ideological spectrum have called a “massive market failure.” It sends a clear price signal that the social costs of fossil fuels – such as increased respiratory disease and extreme weather events – will no longer be hidden in our tax bills and insurance premiums but instead will be clearly reflected in the price of energy and products so we can make better, more reliable decisions about what to buy and where to invest.
Effective carbon pricing systems – such as the one in British Columbia, which served as a model for Massachusetts – have a strong track record of significantly reducing fuel consumption – while stimulating local renewable energy with its locally-grown businesses and jobs. Massachusetts sends more than $20 billion every year out of state for the fossil fuels that are damaging our environment and health. Keeping more of that money in the state would make us stronger.
The Massachusetts Senate has two additional reasons to pass this amendment. First, the region’s power grid operator, ISO, reported recently that carbon emissions from New England’s power plants actually increased in 2015 over the previous year by 5 percent, the first year-to-year increase since 2010. Emissions had declined by about 25 percent in the last 15 years, largely due to the closing of the state’s coal plants and to energy efficiency improvements. But the region has lagged in shifting toward renewable energy such as wind and solar, and instead has become overly dependent on natural gas with its volatile supply and price.
Exactly the wrong direction at a time when Massachusetts already was unlikely to meet its 2020 deadline to reduce its global warming emissions by 25 percent below 1990 levels, a mandate established in the 2008 Global Warming Solutions Act (GWSA). Too many opportunities to accelerate a shift away from fossil fuels have been bypassed.
In May, the state’s Supreme Judicial Court decided that was no longer an option. The Court ruled that the state must comply with the GWSA mandates by implementing regulations that “address multiple sources or categories of sources of greenhouse gas emissions, impose a limit on emissions that may be released … and set limits that decline on an annual basis.”
The ruling was a victory for all those who want Massachusetts to build a stronger, more resilient economy on a foundation of locally-generated, reliable renewable energy but it also leaves the state in a quandary.
Current laws and the proposals in the Omnibus Bill alone are unlikely to bring the state into compliance with the 2020 requirements, and certainly not with the much tougher mandate to reduce emissions by 80 percent below 1990 levels by 2050. In a state that has prided itself on national climate change leadership for many years, we are slipping, still not being aggressive enough to address one of the worst challenges we have ever faced.
The proposed amendment to the Omnibus Bill is sensible and straightforward. It would require the state’s Executive Office of Energy and Environmental Affairs to implement a system of revenue-neutral greenhouse gas emissions fees charged to fossil fuel importers. The revenues from those fees would go into a special dedicated fund for rebates, and be passed on directly to households and employers in order to minimize any increased costs in living and doing business.
Since low- and moderate-income households generally use less energy than wealthier ones, they would tend to come out ahead, but everyone would have an incentive to reduce their use of fossil fuel in order to pay less in fees.
We know from experience that this policy works. We know it is fair. We know it reduces emissions. We know it stimulates jobs and a healthier, stronger economy.
This is the policy Massachusetts leaders must now embrace. It is time for bold leadership.