What is carbon pricing?
Currently there is no fee in the United States for emitting carbon dioxide into the atmosphere. (California and many Northeastern states participate in two different cap-and-trade systems, but neither system applies to the entire US.) Meanwhile, the effects of climate change are felt by society. A 2015 study from the International Monetary Fund estimated the cost of global energy subsidies to be $5.3 trillion (USD), mostly due to the low taxes on energy which do not reflect the environmental damage caused by energy consumption. Carbon pricing corrects for this market failure by increasing the price of goods based on their carbon content, thereby shifting the cost of climate change from society to the entities responsible for the emissions. By raising the relative price of carbon-intensive goods, a carbon price encourages individuals and businesses to purchase less carbon-intensive alternatives.
How does carbon pricing work?
Carbon pricing schemes generally fall into two categories: carbon taxes and cap-and-trade schemes. A carbon tax is a fee that is added to the price of goods proportional to their carbon content. A cap-and-trade scheme begins with an agreed upon cap of the amount of carbon emissions that will be produced and allowances to produce emissions need to be bought. The revenue that is collected from carbon pricing can be returned to citizens and businesses, invested in low-carbon technologies, or used to fund tax cuts.
Why do we need carbon pricing?
Climate change is already happening and it will affect all of us. Natural disasters in 2017 cost more than $300 billion according to NOAA. A 2017 study in Science reported that the poorest third of counties in the US, located mostly in the Southeast and Southwest, may suffer damages of up to 20% in income from climate change in the late 21st century. The reality is that the biggest polluters often pay the least for the damage they do. A carbon price would correct this. Pricing carbon is a bipartisan solution to climate change. Economists who have studied climate change agree that pricing carbon is the best way to curb carbon production and reduce the cost of climate change. Even some fossil fuel companies and prominent conservatives have come out in support of carbon pricing. The carbon tax in British Columbia, Canada, currently at $30 per ton, has been very successful and Canadian Prime Minister Trudeau has said carbon pricing will be expanded to all of Canada by 2018. Amendments to the Clean Air Act in 1990 mandated a cap-and-trade system for sulfur dioxide, which very successfully reduced acid rain in the US. Today the same needs to be done for carbon at Middlebury, in Vermont, and in the USA.
Who supports carbon pricing?
Barack Obama
Bernie Sanders
Bill McKibben
Rex Tillerson
Stephen Hawking
Al Gore
Elon Musk
Elizabeth Warren
Michael Bloomberg
Existing carbon prices
The most significant carbon tax in the Western Hemisphere according to the Carbon Tax Center. Yale Environment 360 (2015) reported that British Columbia saw a 19% improvement in fuel efficiency from 2008 to 2015.
The European Union Emissions Trading Scheme is a cap-and trade system. It worked well when it began in 2005 but prices plummeted in 2008 when the recession caused an oversupply of emissions allowances.
The cap-and-trade program began in 2006 and has beat all its goals. It currently aims to reduce emissions by 2030 to 40% below 1990 levels. Since 2013 it has raised $5 billion.
The Regional Greenhouse Gas Initiative (New England plus NY, DE, MD, and previously NJ) began in 2009 and is a cap-and-trade program for CO2 emissions from power plants and has led to a 45% reduction in carbon pollution from power plants.
Our petition
As a member of the Middlebury College community I ask President Laurie Patton to join other college presidents in endorsing the Higher Ed Carbon Pricing Initiative and a carbon tax in the state of Vermont.
State Level:
We ask our elected officials to work proactively to enact a carbon price both in Vermont and at the national level. By making carbon-intensive industries pay a fair share of the costs of their pollution, we will:
Benefits:
College Level:
To this end, we support the College working toward implementing a fair, internal carbon charge with the appointment of a representative group of students, faculty, and staff in charge of determining its boundaries and the sustainable projects that its revenue benefits until such time as federal and state carbon prices are implemented. This charge will not affect staff paychecks or benefits or tuition costs and will be used in projects that will save the college money in the long-run.
If you wish to sign the petition there will be posters in various locations around campus soon.
References
Coady, D., Parry, I.W., Sears, L. and Shang, B., 2015. How large are global energy subsidies? (No. 15-105). International Monetary Fund.
Howard, P. and Sylvan, D., 2015. Expert consensus on the economics of climate change. New York, NY: Institute for Policy Integrity, New York University School of Law.
Hsiang, S., R. Kopp, A. Jina, J. Rising, M. Delgado, S. Mohan, D.J. Rasmussen, R. Muir-Wood, P. Wilson, M. Oppenheimer, K. Larsen, T. Houser. 2017. "Estimating economic damage from climate change in the United States." Science 356: 1362-1369.
Kennedy, K., M. Obeiter, and N. Kaufman. 2015. “Putting a Price on Carbon: A Handbook for U.S. Policymakers.” Working Paper. Washington, DC: World Resources Institute. Available online at http://wri.org/carbonpricing.
NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and Climate Disasters (2018). https://www.ncdc.noaa.gov/billions/
Useful resources to find out more...