Government

Rhode Island Carbon-Tax Idea Called Bad for the Economy

PROVIDENCE — The sponsors of carbon-tax legislation pulled their bills (H5857 and S417) after deciding the program was bad for the economy.

“It really hogties Rhode Island citizens and Rhode Island businesses,” Rep. Daniel McKiernan, D-Providence, told ecoRI News.

McKiernan said he introduced the bill at the request of Brown University student Solomon Goldstein-Rose. However, after a long of review of the plan, McKiernan changed his mind, calling the carbon fee a $140 million tax.

“When I started doing the math, I realized it was something that didn’t have a shot,” he said.

Goldstein-Rose created the legislation as part of his public policy and engineering studies, which led to the founding of the advocacy group Energize Rhode Island. Its members include the Citizens Climate Lobby Rhode Island and Rhode Island Interfaith Power & Light.

The legislation was modeled on a carbon-tax program in British Columbia, Canada, and the Alaska Permanent Fund Corporation. Both tax fossil fuels and return a portion of the proceeds to residents through direct payments or tax cuts. The British Columbia program taxes fossil fuel that enter the province based on per-ton carbon emissions. The tax increases annually until it reaches a ceiling of $30 per metric ton of emissions.

To offset the added costs to consumers, the British Columbia fuel tax is offset by lower taxes on income and other lower tax rates. The Rhode Island carbon plan would return 70 percent of the tax to residents and businesses. The remaining funds would support energy-efficiency and renewable-energy initiatives.

At least one study has concluded that the British Columbia program has been successful at cutting carbon emissions and reducing personal and corporate taxes. British Columbia’s economy also has slightly outperformed other provinces since the carbon tax began in 2008.

Solomon-Rose and Energize Rhode Island commissioned their own study, which was done by Regional Economic Models Inc. (REMI). The study showed that a state-based fee on fossil fuels would create 1,000 jobs in its first two years, mostly in construction and health care. An additional 3,300 jobs would be created by 2040, according to the 48-page report. Much of the growth is generated through displacing imported energy with the production of local energy and energy-efficiency programs.

The principal idea, said Scott Nystrom, a project manager for REMI, is “to make it yourself rather than getting it from someplace else. That way the dollars and the jobs stay local.”

Members of the coalition called the decision to pull the bills by McKeirnan and Sen. Walter Felag Jr., D-Bristol, a knee-jerk reaction. The group plans to introduce a modified version of the bill next year.

McKiernan called Goldstein-Rose’s carbon-tax proposal “a theoretical exercise” and instead wants to focus on specific renewable-energy proposals, such as building wind turbines on state-owned land.

“We’ve got to work on making (renewable energy) more assessable,” he said.

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  1. We need to put pressure on our Senators and Representatives to have this bill or a similar bill be brought to a vote. Is the "$140 million tax" deducting the 70% that goes back to the residents and businesses of the state or is that the total revenue from the tax, making it a $42 million tax? Does this include the added state revenue from local renewable energy employment?

  2. Why put in the title "bad for the economy"?? The REMI study shows that that national CFD would (in 20 years) a. reduce emissions 2-3x faster (and 2x farther) than regulations by EPA b. add millions of jobs c. add over a $ trillion to the GDP d. provide a monthly check to citizens e. save hundreds of thousands of lives lost to pollution.

    What is bad for the economy? Climate change, such as three 500 year floods in a few decades, wider and worse drought, acidic oceans, sea level rise (estimated at many $ trillions in coastal damages), etc. etc. etc.

  3. Jan, it was called bad for the economy by the lawmakers who sponsored the bill. That was their reasoning for removing the bill, and thus why the phrase was used in the headline. Frank Carini, editor ecoRI News

  4. I think a difference with British Columbia is that RI is too small. If businesses, commerces, offices, have higher energy bills (possibly partially rebated, not clear) they are more likely not to come, not expand, not to stay, they already have high rates. A carbon tax is needed, but on an almost worldwide basis, otherwise business will tend to got o places that don’t pay the tax resulting in a race to the bottom yet again.

  5. I am sorry to read that members of the coalition called the decision to withdraw the bills
    as "knee-jerk." While I have no idea who used that phrase – I want to apologize to
    Rep. McKeirnan and Sen. Felag for its use. Citizens Climate Lobby prides itself on
    treating all legislative members with respect and gratitude – volunteers for
    RI Citizens Climate Lobby would be amiss to use such a phrase!

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