Tuesday, November 25, 2014

Climate justice in collision with revenue-neutral carbon policies?

Plotting options for carbon policy in Washington state, Governor Jay Inslee’s Carbon Emissions Reduction Taskforce just issued its recommendations.  The report sets up a political collision between advocates for neutral carbon pricing systems and climate justice proponents.

The CERT sagely concluded that carbon reduction goals are not going be met by market-based solutions alone.  It is not enough to put a price on carbon, or set a legal cap.  It will take a “harmonized, comprehensive policy approach.”  By increasing the price of fossil fuel energy, market mechanisms provide an “economic infrastructure” that sends “a common price signal across all emissions sources and emissions reductions opportunities.”   This signal must be accompanied by “a well harmonized set of complementary policies” and “targeted use” of carbon revenues. 

“Particular attention needs to be given to the transportation sector as the largest source of carbon emissions in the state,” CERT noted. Complementary policies are needed to promote transit and transit-oriented development, and alternative fuels such as electricity. 

Gov. Inslee's carbon task force called for increased transit invesments.
This emphasis on transportation alternatives is spot on.  It is partly aimed at reducing the impact of increased fuel costs on economically stressed populations.  That’s smart because it is exactly among those populations where fossil fuel interests will seek to drive a political wedge into the unified progressive coalition needed to pass carbon policy. 

For building that coalition, how carbon revenues are spent will be crucial.  “Revenues . . . can be devoted to a variety of purposes.  These include economic development and opportunities for job growth, mitigating impacts to consumers and low-income populations, and investments in alternative energy technologies and modes of transportation . . . Investments in projects that improve energy efficiency, such as building retrofits, and reduce the carbon intensity or use of fuels, such as green infrastructure development, public transportation, renewable energy, and low carbon fuels, could support job growth.” 

This obviously stands in contradiction to revenue-neutral carbon pricing systems such as those advocated by Carbon Washington and the Citizens Climate Coalition.  These systems would redistribute 100% of revenues back to taxpayers, thus allowing no additional funds for carbon-reducing investments.  Reading through the CERT report, there seems to be remarkably little appetite for such systems among taskforce members.  Instead what comes through the report is a sense that carbon revenues need to be spent on carbon reduction, particularly for communities most vulnerable to higher energy prices.  

“A substantial share of revenues . . .  should be invested in actions that reduce GHG (greenhouse gas) emissions and help communities prepare for the impacts of climate change,” King County Executive Dow Constantine said in a supplemental letter. “For example, California’s cap and trade program helps fund local transit service and operations, recognizing the GHG reduction benefits that transit provides by reducing congestion, providing alternatives to cars, and supporting efficient land use and transit-oriented development. Because a market-based solution should not be relied on to achieve all the State’s GHG reductions, it will be important to reinvest a significant portion of the program’s revenue into efforts that support further reductions beyond the impact of the price on carbon.”

Another supplemental letter from CERT members Remy Trupin, executive director of the Washington State Budget & Policy Center, and Adam Glickman, vice president of SEIU Healthcare 775NW, drives home the climate justice point. 

Washingtonians with lower incomes cannot afford to reduce their reliance on carbon-intensive energy sources: Without additional resources, it would be especially difficult for people with fewer social and economic resources to make the expensive investments in retrofitting homes for energy efficiency, fuel-efficient cars, and other low-carbon infrastructure and technologies needed to make the program a success . . . Faced with sharp increases in fuel and energy costs, communities with lower incomes may be unable and/or unwilling to support the long-term goals of carbon reduction."

Trupin and Glickman make a call: “Invest the vast majority of carbon revenues in ways that further reduce carbon emissions. The overarching goal of a carbon pricing mechanism is to reduce carbon emissions. Therefore, the bulk of carbon revenues should be used to ensure reductions are achieved as quickly, efficiently, and painlessly as possible. Devoting a large portion of carbon revenues toward provisions to help communities with lower incomes absorb higher energy costs and reduce fossil fuel consumption would be an effective way to achieve long-term carbon reductions.”

CERT members as a whole made a priority on investment of revenues in ways that “address any prospective adverse impacts on racial and economic equity” and improve public health in emissions-impacted communities, particularly low-income and minority.

Another supplemental letter from member Rich Stolz, Executive Director of immigrant advocate group OneAmerica, contains a “Principles for Climate Justice” declaration adopted by the Asian Pacific Islander Coalition, El Centro de la Raza, Climate Solutions, Community to Community, Got Green?, the Latino Community Fund, OneAmerica, Puget Sound Sage and Washington CAN!

“Racial equity must be at the center of policies that address climate change,” the principles state.  “People of color and communities with lower incomes must receive net-environmental and economic benefits.”

“Revenue raised through any program should be used on strategies with a strong nexus with policies and programs that address climate change, and should be invested directly in lower-income communities, indigenous communities and communities of color so that the economic benefits outweigh the policy’s economic burdens. 

“Reinvested revenue should work to accomplish the following: The highest priority for reinvestment must be to mitigate financial costs of implementation to communities with lower incomes. Further reduce our reliance on fossil fuels. Create clean, living wage jobs that open pathways for people with lower-incomes, people of color, and local residents to enter the green industry workforce. Enable people to live where they work with access to clean transportation, an affordable place to live, and clean and secure food sources.”

The way the climate movement is morphing into the climate justice movement is quite encouraging. With the end of the bipartisan environment that made some progress on climate policy possible in the mid-2000s, it will take a strong and unified progressive coalition to achieve success.  This is boldface underscore true if the Washington climate policy debate is ultimately settled by ballot initiative, as the unfavorable politics of a Republican state senate indicate is the likely outcome.

Advocates for revenue-neutral systems will argue that redistribution of revenues will allay impacts on lower- and middle-income communities.  Washington with its sales tax based system is the most regressive in the nation. A general cut in sales taxes, or directed tools such as tax credits returned to working families, certainly would help those communities.  Some form of revenue redistribution will almost certainly be part of any proposal forthcoming from the governor. 

But a pure revenue-neutral system seems not in the cards.  One key point coming from polling is that people really do not believe politicians will really return all the revenue. And in fact people do support affirmative public policies to build up transit, green jobs, energy efficiency retrofits and other measures that will benefit us all, but especially the most economically stressed among us.

The demand for climate justice now coming from many quarters will powerfully drive such policies. That is one of the strongest messages coming out of the CERT process.  Assembling any winning coalition will require strategies to invest carbon revenues in ways that directly address the climate justice imperative.  It is time for revenue-neutral advocates to recognize that the political landscape is shifting and consider more mixed systems that indeed do invest directly in the public good. 


  1. A "Fee and Dividend" (F&D) policy is anti-regressive and benefits the poor the most, giving them more money in the dividend than they pay in higher prices. The difference between F&D and what is described in the article is that with F&D every legal resident gets an equal payment -- you and Bill Gates get the same check every month -- it's not based on taxes paid. There is no room for the government to rig the system since everyone will know the 2 numbers that count... what was the total amount of fees collected and how many legal residents there are. The reason the poor (and middle class) do well under F&D is because the wealthy generate far more CO2 than the average person and the government generates about a third of the CO2 but does not get a dividend. So the result is that the vast majority of people (almost all the poor and middle class) earn more in the dividend than they pay in higher prices.

    I gave a recent TEDx talk on F&D:

    As I mention in the talk, an F&D policy will create 2.8 million jobs and grow the economy by $1.4 trillion, which will further help the poor and middle class. Here is the link to the economic analysis:

    Another benefit of F&D is that the fee can go higher than under other plans because the public will be happy getting the money back. A higher fee will accelerate our transition to a clean energy economy. We don't have much time left. And the poor will suffer the most from our inaction.

  2. Thank you Patrick! We so need your eyes and ears making sense of the institutional rumble. Your intellectually solid, values-based analysis is precious.

  3. Thanks for distilling the essence of the matter, Patrick.
    The revenue neutral carbon tax approach has 2 advantages over the comprehensive policy approach.
    1. Fee and dividend (a.k.a. revenue neutral carbon tax) returns a lot of money to people - amounts that will be very significant to lower and middle income folks, who will then be able to afford investments to reduce energy use. They will see in their monthly budgets that it's worth reducing their power, heating and fuel bills.
    2. This approach can have broad appeal across the political spectrum. The comprehensive policy approach is feared by many as an expansion of government.

    There might not be as much progress towards social justice and climate justice - but it would be a big step in that direction if people start receiving checks for hundreds of dollars a month.

  4. Exactly right Patrick. It's painful to see progressives acting like Dems, trying to give up half the loaf before the negotiations begin rather than charging forward with a vision worth rallying behind.

    Always ever is it in the name of "what's practical", and that's the rub: the enemies of change want precisely that.

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