Massachusetts could reduce carbon emissions far more significantly by streamlining existing greenhouse-gas reduction initiatives than by implementing a bureaucratic new carbon tax.
That’s why Associated Industries of Massachusetts will oppose a carbon-tax bill and offer an alternative strategy during a Beacon Hill hearing tomorrow.
An Act Combating Climate Change would establish in its first year a carbon tax of 10 dollars per ton of carbon dioxide emitted, rising steadily to 40 dollars per ton in year seven on all fossil-fuel use (gas, diesel, natural gas) in transportation (on and off road vehicles, trucks, recreational and commercial vehicles, including buses, trains and vans) and residential and business heating and process.
Fuels used to generate electricity would be exempt because there is already a carbon tax on those sources.
The money generated – almost $600 million dollars the first year and rising to $2.4 billion in year seven - would be returned as rebates to residents and business by a mechanism to be developed by the state Department of Energy Resources (DOER). Rebates would be made in rough proportion to what each sector pays. Based on current usage, approximately 60 percent of the funds would come from the transportation sector.
AIM opposes the carbon-tax bill because the rebate mechanisms is expensive and overly bureaucratic. Collecting and rebating money to nearly 7 million residents and 250,000 or more businesses will be an enormous administrative burden that will cut into the rebates.
AIM estimates that the average payer will get back through rebates only 50-60 percent of the amount paid into the tax. Certain groups could get more than they paid.
Rather than establish an entirely new program, AIM suggests fixing the current programs; and if a carbon tax is desired, replace the current funding for the existing programs with the proceeds of a carbon tax.
Massachusetts already surcharges both residential and business electricity and natural gas users to support programs that reduce greenhouse-gas emissions. Those surcharges generate almost $2 billion dollars per year.
These programs could be more efficiently managed through the one source of revenue envisioned in this legislation.
Our recommendations include:
- All carbon emissions, including the electricity sector, should be subject to the carbon tax.
- The carbon tax should replace the carbon tax instituted under the state’s participation in the Regional Greenhouse Gas Initiative (RGGI).
- All current programs that deal with energy efficiency and renewable energy that are funded by ratepayers or taxpayers should be eliminated, including those currently directed at the transportation sector.
With all programs eliminated, the single funding source would be overseen by a new advisory council – the Carbon Reduction Advisory Council - made up of a diverse group of stakeholders. Under the direction of this advisory council, the funds would be channeled to programs that would compete to provide the best carbon-reduction strategies.
This would be a bold change to the way Massachusetts operates these programs. But a bold change is needed. Many of the existing programs have become hidebound and uncoordinated. New ideas that could help our collective carbon-reduction goals are not instituted because they do not fit into current silos.
This new thinking is not only better but necessary to attain the commonwealth’s greenhouse gas reduction commitments.
Please contact me at 617.262.1180 or a firstname.lastname@example.org if you would like more information or updates on the carbon tax.