Campaign News

The R Street Institute — a non-profit, non-partisan, public policy research organization that promotes free markets and limited, effective government — calls a carbon tax a “bargain for conservatives.”

In a policy study written by Catrina Rorke, R Street’s director of energy policy, the institute says even a modest carbon tax will bring big results: “The price doesn’t have to be large. If the necessary steps are taken to remove government-imposed obstacles to innovation and wealth generation, a relatively modest price will reshape economic decision-making. A modest carbon price of about $20 per ton would reduce emissions 8 percent below business as usual . . .” (I-732 imposes a price of $15 a ton in the first year and $25 in the second, with annual adjustments.)

The report also says that current policy “imposes a high and inefficient price on carbon emissions across a number of economic sectors. Society stands to gain in both environmental outcomes and economic performance by moving to a more straightforward policy that pursues carbon reductions by mobilizing the marketplace. This can be done by placing a direct price on emissions.

“This carbon price – or carbon tax – would force the market to make decisions that take into account the future damage stemming from carbon emissions. A direct carbon price elevates behaviors that result in fewer emissions above behaviors that result in more emissions – like searching out a car with better fuel efficiency – by including some approximate cost for climate damage into every decision. If it costs less to reduce emissions than to pay the tax, those investments will be realized. This isn’t a radical policy that seeks to transform the economy overnight, but rather a steady expression of carbon risk through a transparent signal that lets the market decide how best to reduce emissions over time.”

Other highlights:

• “Society stands to gain in both environmental outcomes and economic performance by moving to a more straightforward policy that pursues carbon reductions by mobilizing the marketplace. This can be done by placing a direct price on emissions.”

• “A modest carbon price of about $20 per ton would reduce emissions 8 percent below business as usual and allow the government to collect an estimated $1.2 trillion over the first decade.”

• “A properly designed revenue-neutral price on carbon will improve economic efficiency, promote better environmental outcomes than existing policy and allow market forces to determine the course to a lower-carbon future.”

• “While [a carbon tax] is an elegant solution that accounts for environmental harm and reduces it at the lowest cost, its largest benefit is that it can accomplish this while also reducing costs elsewhere in the economy. Government currently is financed through a bevy of taxes on things that actually should be encouraged … Reducing this tax burden through a carbon tax would offset the costs of carbon-emission reductions and keep the government from growing in size, scope and power.”

• “Devoting revenues to anything other than reducing existing tax burdens would raise the cost to achieve reductions, as well as offering motivation to grow government and invest in bureaucratic priorities. A carbon tax must be revenue-neutral.”

• “Creating a policy that leverages market efficiencies and creativity will yield more stable, long-term reductions and a more innovative, wealthy future.”

• “The elegance of a revenue-neutral carbon price is that the economy may devise solutions that aren’t initially apparent.”

• “Addressing carbon emissions does not have to come at a high cost or through prescriptive, redundant or iterative regulations. The market adeptly adjusts to price signals about relative costs. Creating a policy that leverages market efficiencies and creativity will yield more stable, long-term reductions and a more innovative, wealthy future.”

Catrina Rorke is director of energy policy and a senior fellow at the R Street Institute, where she promotes smart, small-government solutions to energy and climate challenges.

Read R Street’s policy study.

About Initiative 732

I-732 represents the most effective climate policy and the most progressive tax shift in decades in Washington and is designed to move the state toward two goals – cleaner energy and fairer taxes – with the following policy objectives:

• Tax pollution, not people. I-732 will add a $25 per ton tax to polluting fossil fuels
• Pay less at the cash register. I-732 reduces the state sales tax by one percentage point, putting hundreds of dollars a year back into the pockets of each household in Washington
• Support working families. The policy funds the Working Families Tax Rebate, providing up to $1,500 a year for approximately 400,000 low-income households
• Promote innovation and economic growth. I-732 supports business growth and job creation by effectively eliminating the Business and Occupation Tax on manufacturing

About Carbon Washington

Carbon Washington is a non-partisan grassroots group of scientists, economists, former elected officials, business owners and concerned citizens focused on seeking a solution to climate change that works for businesses and households around the state. The group developed Initiative 732 as a revenue-neutral approach to taxing carbon pollution while encouraging economic growth for families and businesses in Washington. To learn more about I-732, view endorsements from around the state, and get involved, visit YesOn732.org and follow on twitter @CarbonWa.