Rhode Island Looks to be First State with Carbon Tax
February 4, 2017
PROVIDENCE — A bill to tax fossil fuels is back again, and this time it’s designed to be more attractive to skeptical lawmakers.
The goal of a so-called “carbon tax” is to accelerate Rhode Island’s transition from oil, gasoline and natural gas to local renewable energy. It’s a worthwhile idea, say proponents, because Rhode Island doesn’t mine or drill its own carbon-based fuel.
Instead, Rhode Island spends $3.1 billion annually on carbon-intensive gasoline, oil and natural gas extracted from outside the state. A fee on fossil fuels would keep that money local by offering incentives to produce local energy, while cutting greenhouse gases and creating jobs.
“With Exxon running the State Department and climate deniers at every level of Trump’s administration, we must accept that the ambitious climate action necessary to guarantee a habitable planet for our children is not going to come from Washington,” said Rep. Aaron Regunberg, D-Providence, sponsor of the Energize Rhode Island: Clean Energy Investment and Carbon Pricing Act of 2017.
This year, the bill is designed to only take effect when Massachusetts passes a similar carbon tax. To do so, the EnergizeRI Coalition is collaborating with other New England states to pass fee-on-carbon programs.
“This policy would make Rhode Island a city on a hill when it comes to ambitious climate action, helping to inspire other states to follow our lead,” Regunberg said during a Feb. 2 kickoff event at the Statehouse. “Anyone who was worried about this policy making Rhode Island an outlier should have no reason not to support immediate passage of this legislation because it’s not actually going to be implemented until our neighbors step up and follow suit.”
Rep. Jonathan Steinberg of Connecticut and Massachusetts Sen. Michael Barrett are legislating similar carbon-fee bills in their states.
The fee works like this: a tax of $15 is placed on each ton of carbon dioxide or other greenhouse gases emitted from the burning of a fossil fuel. Power plants, electricity and fuel distributors, and gas stations that sell the fuel are assessed the tax. The money would be collected in the Clean Energy and Jobs Fund and “recycled” back into the state. Twenty-five percent of the money would fund programs for renewable energy, energy efficiency and climate-change adaptation. Thirty percent would be returned as a dividend to companies based on their number of full-time employees. Forty percent would be paid as a dividend to each Rhode Island resident. Employees and residents earn their funds via tax credits or receive a check if they don’t file a tax return.
Taxed fuels would include propane, gasoline, kerosene, heating oil, diesel fuel and jet fuel. The fee would be collected at the first point of sale or distribution. A natural gas distribution company such as National Grid would pay the fee annually. A gas station would either have the fee paid by its distribution company or assess the fee at the point of sale.
A study conducted last year by Regional Economic Models Inc. of Amherst, Mass., estimated that the fee-dividend model would reduce energy expenses for the average Rhode Islander, while costing an estimated $25 a year for higher-wage earners.
If other states follow suit, the fee would begin Jan. 1, 2018. It’s projected to collect some $40 million in its first year, and create 1,000 to 2,000 jobs in its first two years. After 2020, the fee increase $5 annually.
British Columbia enacted a carbon tax in 2008, which is considered a trial model. Reports indicate that the fee reduced emissions and had a mild benefit on the economy. Much of the rest of Canada is expected to adopt a carbon tax this year. Ireland enacted a fee on carbon in 2010. Australia enacted a carbon tax in 2012, and repealed it in 2014. Chile approved a carbon tax in 2014, but it doesn’t take effect until 2018. Washington state defeated a carbon-tax referendum last November.
“The need for this legislation has never been more critical,” Regunberg said.
He noted that Rhode Island is already suffering from climate change. Ambitious steps are needed to save the planet from the impacts of climate change, but help isn’t going to come from the federal government, he said. “It’s going to have to come from the states.”
The bill was introduced in the House on Feb. 3 and will be reviewed by the House Finance Committee. A hearing date hasn’t been set.
The Senate bill will be sponsored by Sen. Jeanine Calkin, D-Warwick.
“This is our generation’s moonshot and we need to take steps to do it right now,” Calkin said.
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Fantastic, long overdue, we (the human race) should have done this 20+ years ago.
How about no more taxes and use the money you get more effieciently.
Is this guy on drugs? RI taxpayers are over taxed. We have a tax and spend governor and apparently GA as well. Try talking to the people you serve. They will tell you they are having trouble making ends meet and you want to put a fossil fuel tax on them. You are worried about taxes on fuels..How about trying to help those with no benefits from the UHIP debacle that your boss Mattieyellow is ignoring instead of taxing people to death. And how clueless to put National Grid in charge of paying the fee annually without them getting something out of it, too. They are already getting from National Grid both gas & electric customers thanks to a Mattiello intervention, money for heating assistance. All you progressive types do is add more debt burden to taxpayers.
Try cutting down the GA budget, Try cutting out the waste in the GA budgets and try putting your feet in the shoes of those struggling to put food on their table and paying their already high bills. You apparently are more interested in protecting fossil fuels than protecting the constituents who put you there.
You are clueless Mr Regunberg as to what families go through on a daily basis to survive
if they repeal all the gruesome ridiculous subsidies we already have for ‘green’ energy, and they fully rebate a carbon tax, then this could make sense. Cancel the excess payments to deepwater would be top of the list. Deepwater does not have a contract in my opinion, they have a legistated arrangement, like pensions, and if we think a rebated carbon tax is a more appropirate incentive then repeal the corporatist crap first or as part of the bill. stop reverse net metering. stop paying excessively for wind land based wind energy. if this renewable energy is supposed to be competitive now, which is what all this snake oil salesmen say, then an evenhanded rebated carbon tax means that this door to door vacuum cleaner salesmen crap is left up to the individual consumer to compare their carbon rebate and decide if it is smart for them to install some form of energy production on their property. but the current rules pay them the same as if they owned the distribution system. Currently Grid is collecting on the order of 10¢ a kwh for the grid. There is absolutely no excuse to give that subsidy to people who don’t operate the grid.