NewEnergyNews: COLORADAN PROPOSES CARBON TAX

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  • Thursday, November 29, 2007

    COLORADAN PROPOSES CARBON TAX

    Not surprisingly, this politically unpopular tax is proposed as a ballot measure by a failed political candidate. Ironically, most economists agree a tax would be a more effective way to curb greenhouse gas (GHG) emissions. But, given adamant public opposition to any new tax measure, no candidate who still expects to run for office would propose it.

    Despite its admirably provocative and progressive nature, even in Colorado this proposal faces an electorate disinclined to charge itself the price of correction, despite its concern with climate change.

    Too, there are significant complexities in an emissions tax. First, what is the fair thing to do with the revenues? Second, how high does the tax need to be to curb consumers appetites? Because these questions raise such problems, many prefer a cap-and-trade system as the means to cut emissions.

    And, Colorado’s governor is probably right that a single state acting alone would only handicap itself economically (in the short run). This is a national matter and needs to be handled by Washington.

    What’s that NewEnergyNews is hearing? The sound of politicians running?


    Proposal calls for carbon tax
    Mike Saccone, November 24, 2007 (Grand Junction Daily Sentinel)

    WHO
    Failed Democratic House of Representatives candidate Sue Radford; the Colorado Legislative Council; Colorado Governor Bill Ritter; Evan Dreyer, Ritter spokesman

    click to enlarge

    WHAT
    Radford’s ballot proposal asks voters to approve a fee to energy companies for GHG emissions produced in electricity generation. The fee, Radford’s measure assumes, would be passed to consumers in their electric bills. But the revenues would be redistributed to ratepayers via sales, business, personal property and payroll tax cuts and rebates.

    WHEN
    - Radford lost a bid for the House of Representatives in 2006
    - With enough signatures, the proposal could make Colorado’s 2008 ballot.

    WHERE
    - Radford lives in Fort Collins, Colorado.
    - Her tax proposal would only apply to Colorado.

    WHY
    - Radford’s proposal is sponsored by the Colorado Clean Energy Tax Shift.
    - Unlike many taxes, Radford’s proposed fee would not be to generate revenue for the government but to discourage consumption of GHG-producing energy. Nevertheless, revenues would be huge because consumption of GHG-producing energy is enormous. Thus, Radford’s proposal to redistribute the money.
    - Realizing the tax could not be handled by politicians as a legislative measure, Radford chose the ballot measure process.
    - Governor Ritter’s recent emissions-reduction plans did not include a tax. His spokesperson said that acting alone on this would put the state at an economic disadvantage.

    Despite contentions that a carbon tax is simpler than a cap-and-trade system, the tax has complexities, too: How much of a tax will it take? What is best to do with the revenues? (click to enlarge)

    QUOTES
    - Radford, on her carbon tax proposal: “I am somebody who is deeply concerned about the way our climate is changing…A carbon tax is the most fair and comprehensive and transparent and enforceable way of dealing with the problem…When you do that, the amount of revenue you collect becomes large, and you don’t want to remove that kind of money from the economy or expand government that much…So the best thing to do, seeing that our climate is a shared resource … is to refund the money.”
    - Evan Dreyer, spokesman for the Colorado governor: “A carbon tax imposed by a single state would be very difficult to administer…This is the sort of thing that should be considered only on a national scale…If demand is strong enough, emissions will still rise despite the tax…There is no guaranteed cap on emissions.”

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