by Sam Irvine, 10.20.13
On Monday the governors of California, Oregon, Washington and British Columbia’s Minister of Environment signed a West Coast climate pact. The pact takes a big step towards pricing carbon up the western coast.
In a nutshell, under the Pacific Coast Collaborative the states have agreed to join their economic forces to put a price on carbon, promote green jobs in the region, meet energy efficiency portfolio targets and develop a sustainable regional economy.
Current state of climate policy:
California and BC already have emission pricing mechanisms on the books. California’s cap and trade program is unique in that it integrates a price floor of $10 per ton of CO2 emissions. This is in part to prevent the market value of carbon credits from dropping below a level that results in emission reductions.
British Columbia uses a revenue neutral carbon tax to price its emissions. Right now emissions are taxed at a flat rate of $30 per ton and are slated for future increases.
Options for Oregon and Washington:
Despite the success of these two programs the question remains: how will Oregon and Washington follow suit? In both states attempts to price carbon through taxation and trading methods have been stopped in the legislative process.
Silvio Maracci writer for CleanTechnica published an article on the climate pact in which he states,
Under the action plan, the jurisdictions agreed to harmonize their 2050 emissions reduction goals while developing shorter-term targets in the interim – certainly a requisite first step toward any kind of larger linkage, but still a long way off considering formal emissions reduction policies would likely require statewide ballot approval.”
Read more at http://cleantechnica.com/2013/10/28/north-american-west-coast-signs-climate-change-pact/#PXsfzlwZslisJsdH.99
Choosing a carbon tax or cap and trade is a hard task:
Having two policy options, both with their own strengths and weaknesses, could clog the political process in Oregon and Washington. It effectively divides policy advocates into two camps, those for a tax and those for cap and trade, and divided they may fall.
It is likely the choice will ultimately be left to ballot initiative and voters in the two states. Having two separate initiatives divides the message that voters will hear and may result in a split vote come ballot season, reducing the political viability of both options.
There is also the finer detail of choosing what to do with revenue from carbon markets. Many would like to see the raised money fund renewable energy projects, myself included. However this may be too lofty a goal for a preliminary policy. If a tax or trading program is not revenue neutral it may lose support of conservatives by appearing socialist. Any policy subtext that redistributes funds towards renewables may be the first bargaining chip to be cut come partisan negotiations.
The climate pact ultimately is a step in the right direction. It is a direct political response to growing concerns about climate change and its impacts on the western states. Most importantly the agreement hints that the choice between cap and trade or carbon tax will soon be brought to Oregon and Washington ballots.
(If you want to learn more about revenue neutral carbon taxes check out our interview with Phil Carver, Oregon Department of Energy’s Senior Policy Analyst who has worked to evaluate the BC carbon tax in the context of Oregon’s Economy.)
(More case study on the historic market failure of cap and trade: Why have Carbon Markets Failed?)