Sunday, June 2, 2013

Looking at an Oregon Carbon Tax

            In the May 16th edition of Sustainable Life, there was an article titled “Taxing Carbon Gets New Scrutiny”, regarding a carbon tax for the State of Oregon.  A carbon tax is a surcharge on gasoline, coal, natural gas, home heating oil, and other fossil fuels based on the greenhouse gases they emit.  Greenhouse
gases contain carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and fluorinated gases, with the majority of these emissions being carbon dioxide (EPA website).
            A state carbon tax would benefit Oregon in several ways.  Money generated could be used for schools and state services, to reduce corporate state taxes, and as a subsidy for lower-income households to offset the increase in energy prices.  The money generated could also be used for further research and development of clean-energy.  A carbon tax would encourage businesses and consumers to reduce their energy use and provide a greater incentive to support renewable energy sources of fossil fuels. 
            In Oregon, the greenhouse gas reduction goals are to be 10% below the 1990 emission level by 2020, and 75% below the 1990 level by 2050.  A study by The Northwest Economic Research Center at PSU found that a $30 per ton state tax on carbon emission would reduce current greenhouse gas emissions only 2% by 2015.  They felt that the tax would need to be $100 per ton to meet the 10% reduction goal, and it would meet the goal in 2030 instead of 2020. This amount of tax would increase the price of gas by about 94 cents per gallon (Northwest Economic Research Center, Portland State University).  British Columbia passed the first North American carbon tax in 2008 and the consumption of refined petroleum decreased within the first three years while consumption increased throughout the rest of Canada during that same time.  The carbon tax did not negatively effect employment in British Columbia.
            Another option to reduce greenhouse gas emissions is through cap and trade.  This system is not as simple as a gas tax because it is a market-based trading system.  This style of system focuses more on emissions from business, rather than individuals.  This creates incentive for companies to reduce their emissions as the “cap” drops and “trade” allows them to sell their credits to other companies. 
            There is some talk that carbon emissions should be dealt with at a national level rather than the state level, with the focus on reductions.  I think that a solution would involve a carbon tax at the state level, along with a cap and trade system at the national level.  States could use the tax revenue however they feel is best, while the cap and trade system being managed at the national level would prevent businesses from moving out of state.  Ultimately, the benefit in reducing greenhouse gases is widely known; this system would encourage everyone to make the necessary reduction to meet our goals.

Article referenced:
Pamplin Media Group, Sustainable Life “Taxing Carbon Gets New Scrutiny” by Steve Law

Thank you to Shawn Ingersoll for reviewing my article.

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