This coming Wednesday, supporters of carbon pricing will descend en masse upon the Massachusetts State House to advocate for passage of a carbon fee and rebate policy in the Commonwealth. Energy has been a hot topic in Massachusetts over the past several months, as the state looks to meet the carbon emission reduction mandates it set out in the Global Warming Solutions Act of 2008 while also encouraging growth in the clean energy sector. Massachusetts is at a crossroads and must decide whether it will commit to an economy based not on fossil fuels, but on sustainable, renewable energy.
A key to that shift is carbon pricing, which can align our economy with our commitment to reduce the greenhouse gas emissions that cause global warming and already are causing great harm and increasing costs. Massachusetts often has led the nation before - on universal health insurance and marriage equality, for example. The decision we make now on carbon pricing will send a clear signal to the other states considering this policy and to Congress that it is time to step up our game and take serious, stronger action to address climate change.
Carbon pricing emerged from the COP21 conference in Paris with unprecedented, widespread support among government and business leaders as a key to reducing carbon emissions. As President Obama told business leaders, "I have long believed that the most elegant way to drive innovation and to reduce carbon emissions is to put a price on it." In the months since then, the chorus supporting carbon pricing has grown even stronger, as leaders point to the 74 countries and 23 sub-national governments, including British Columbia, which have demonstrated the success of carbon pricing. In BC, for example, fuel consumption declined by more than 16 percent since that Canadian province passed its carbon pricing policy in 2008.
The United States has been lagging behind, which is why it is so important for Massachusetts to pass carbon pricing now. We are running out of time to make the sensible policy choices that will lead to systemic change. If we do not act, we will pay for it one way or the other, whether in the form of higher health care and public health costs or by repairing infrastructure destroyed by extreme weather. The reality is that New England's way of life will be lost, as we will no longer have the four seasons we are accustomed to and as our coastal communities will face increasing threats.
The proposals put forward in the Massachusetts legislature - for a form of carbon pricing called carbon fee and rebate - are eminently reasonable. They are also tailored to fit an economy that has to import every bit of coal, oil or gas burned here (as our local energy resources aren't fossil-based) by encouraging energy efficiency or clean renewable technologies. One bill, S. 1747, would charge fossil fuel importers a fee based on the carbon content of the fuels. The revenues from those fees would be collected in a special fund and then sent directly on to residents and businesses in the form of rebates.
Each resident would receive an equal rebate from the fund, giving everyone an incentive to reduce their use of fossil fuel in order to keep more of their rebates. Since low- and moderate-income households tend to use less energy than wealthier ones, they would on average come out ahead, according to a study done for the Commonwealth's Department of Energy Resources (DOER). Businesses, nonprofit organizations, and municipalities would receive a dividend from the fund based on their share of the state's employment, and most industries and economic sectors also would come out slightly ahead.
Another developing proposal - S. 1786 - follows a similar model but would invest a small portion of the funds in the clean energy sector. In both cases, Massachusetts would be implementing a policy that encourages residents and businesses to use less fossil fuel, thus reducing carbon emissions while building a more solid, less volatile energy foundation for the economy.
Effective carbon pricing also results in job growth and strengthens the economy by keeping more of our energy dollars in the local economy, according to the state's DOER study. Instead of sending $20 billion a year out of state to import fossil fuels, that money can be used to grow and expand businesses and create new jobs. In addition, just as British Columbia's clean energy sector experienced tremendous growth once its carbon pricing policy took shape, we can expect similar growth here. Leveling the playing field by making out-of-state, polluting fossil fuel producers pay for the costs they are imposing on residents of the Commonwealth will benefit our strong clean energy sector, a linchpin of the Commonwealth's innovation economy.
In the next few weeks, legislators will decide how carbon pricing should move forward this session. Supporters will be at the State House this week to let their state senators and representatives know that they support carbon pricing and to urge them to pass the proposed legislation. And while our focus is laser-sharp on decision-makers in Boston this week, we also recognize that the eyes of the nation are watching how this debate moves forward in Massachusetts. With any luck, as goes Massachusetts on carbon pricing, so goes the nation.