Carbon advocates won’t quit after a string of defeats

Source: Benjamin Storrow, E&E News reporter • Posted: Wednesday, November 14, 2018

Carbon taxers are a stubborn lot.

After losing a ballot initiative in Washington state last week, they might be expected to give up and search for an alternative climate solution. After all, the loss is the third in three years. Not even Washington’s blue hue or a national Democratic uplift could push a fee on carbon pollution over the finish line.

But many carbon tax advocates said they were undeterred by the setback in the Pacific Northwest. In Washington, a champion of carbon tax legislation in the state Senate said lawmakers will focus on renewable legislation, a low-carbon fuel standard and other smaller climate measures in the coming year. He nevertheless refused to rule out carbon pricing legislation.

In Massachusetts, the author of an emissions pricing bill that unanimously cleared the state Senate earlier this year said he plans to try again in 2019.

And in Washington, D.C., national climate hawks said the failed Washington state measure showed that it’s time to shift focus from the states to Congress.

“I’m not convinced that this result in Washington tells us a lot about the viability of carbon taxes in Washington and at the federal level,” said Joseph Majkut, director of climate policy at the Niskanen Center, a libertarian think tank.

For one thing, oil companies spent $31 million to defeat it, pillorying the proposal for allowing exemptions for aluminum smelters, pulp and paper mills and a retiring coal plant. That argument is harder to make at the national level, where the threat of companies picking up and leaving is diminished.

The cost of the tax is also more broadly distributed, Majkut said.

“The point of a carbon tax, in my mind, is it spreads out the appreciation of the cost of climate or need to decarbonize to lots of individual actors all over the country, and agglomerates their efforts to reduce emissions and innovate our way to a low-carbon economy,” he said.

Carbon taxes appeared poised for a breakthrough this year.

A Nobel Prize was awarded to William Nordhaus, a Yale University economist who has spent much of his career studying carbon taxes. Pricing carbon emissions was endorsed by the U.N. Intergovernmental Panel on Climate Change. And in Canada, Prime Minister Justin Trudeau has staked his political future on the rollout of a national carbon tax.

Instead, American climate action advocates are back at the drawing board.

The Washington defeat showed carbon prices are better pushed through legislatures than on the ballot, where it is difficult to defend complicated and nuanced policy, said Massachusetts state Sen. Michael Barrett (D).

“I would have been tickled to see success in Washington state, but I never believed an idea this nuanced would survive the last three weeks of the ad wars,” Barrett said.

The Massachusetts lawmaker has long championed a carbon tax in the Bay State. Last year, his proposal to require the governor to adopt an economywide carbon price starting with the transportation sector in 2020 was unanimously passed by the state Senate as part of a larger energy bill. The provision was later removed after opposition from House legislators.

Barrett was buoyed by Massachusetts Gov. Charlie Baker’s (R) endorsement in his last debate with Democratic challenger Jay Gonzalez of a regional cap-and-trade program for the transportation sector. Massachusetts is already part of the Regional Greenhouse Gas Initiative, a cap-and-trade program encompassing the power sector in nine Northeastern states.

“He’s been quietly working toward that for a year and half,” Barrett said of Baker. “What was important was that he surfaced it publicly. I always expected him to surface it publicly after the election. He jumped the deadline just a little. If he goes down that road, he will find strong bipartisan support. There’s no better time to do something difficult, but necessary, than in one’s second term.”

The Washington vote was supposed to be a test in a long-running debate in carbon tax circles over what to do with the revenue raised by a tax. In 2016, when the idea was first put before Evergreen State voters, the plan was to use the money to offset other taxes. The initiative lost 59 percent to 41 percent.

This year, proponents of carbon pricing repackaged the idea as a fee and crafted a plan that proposed spending much of the revenue on clean energy projects, which generally poll well with the public. Yet the change did little to alter voter perceptions, despite the fact that this year’s measure had the backing of prominent Democrats, businesses and labor and minority groups. It lost 56 percent to 44 percent.

That debate is likely to continue, said Noah Kaufman, a researcher at the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs.

“We have a lot of people who believe in what they see as the best political approach for a carbon tax, but not a lot of evidence for one approach or another,” he said.

In Washington, D.C., national climate hawks sought to frame the Washington loss as a chance to revive the discussion at the federal level. They argued that a national plan would be more effective at cutting emissions and providing businesses with the certainty needed to decarbonize the economy.

“To make a carbon fee popular and equitable, all the money should be returned directly to citizens,” said Ted Halstead, chairman and CEO of the Climate Leadership Council, which was created to back a revenue-neutral carbon tax in Congress. “To make it politically viable, we need a plan that Republicans and Democrats, industry and environmentalists, can all get behind,” Halstead said.

The leadership council’s plan was crafted and endorsed by James Baker and George Shultz, two Republican statesmen. Exxon Mobil Corp., the oil giant, recently gave the CLC $1 million to promote the idea.

Its chances of succeeding are remote as long as President Trump is in the Oval Office and Republicans control the Senate. And it ignores the fissures within the carbon tax movement.

Charles Komanoff, director of the Carbon Tax Center in New York, said he would always support a carbon tax, provided it was structured in a way to minimize the burden on the poor. Yet he expressed doubts that Republicans could ever be convinced to support the idea.

“They are never going to come on board for meaningful climate policy. That’s the lost cause,” he said. “The way forward is to continue to shrink the Republican Party and achieve a real Democratic majority in Congress that is resolved to deal with climate and understands intellectually that a carbon tax has to be and can be the foundation stone of that program.”

Bob Inglis, the former South Carolina Republican congressman who leads republicEn, a conservative think thank in favor of climate action, came to the opposite conclusion after last week’s results.

“It’s pretty clear after Tuesday that the left alone cannot get this all the way up on the beach. It is going to take some energy from Republicans to push this thing along,” Inglis said.

The problem, in his mind, is that many Republicans associate acceptance of climate change with other Democratic positions. They need to hear a conservative argument for tackling the climate challenge, he said. The former South Carolina congressman is fond of touting a video clip of Milton Friedman, in which the conservative economist argues for taxing pollution.

In many respects, the debate over carbon taxes is back at the beginning.

Washington state Democrats will use their expanded majorities in Olympia to pursue a 100 percent clean energy standard, a low-carbon fuel standard and more stringent building codes, said state Sen. Reuven Carlyle, a Democrat and carbon tax champion.

He also refused to rule out carbon pricing.

Oregon is on the cusp of passing a carbon cap-and-trade bill and joining California’s emissions reduction program following Oregon Gov. Kate Brown’s (D) re-election last week. And as California’s program expands, it becomes more enticing to its neighbors.

“I think it becomes very viable as a policy,” Carlyle said. “I think there is a level of analytical vigor, intellectual rigor we would have to commit to that question.”

But, he added, “when I said everything’s on the table at a policy level, I mean everything’s on the table.”