New England’s Best Weapon Against Trump’s War On Climate: Regional Energy Transition Fee
From an environmentalist’s perspective, these are the worst of times. The defunding and intended dismantling of solar and offshore wind, the rescission of billions of dollars in renewable energy investments, the evisceration of a professional administrative state and its replacement with fossil fuel sycophants, and a general and pervasive rejection of science as a public good that we should cherish and embrace: the sum is an unmitigated disaster.
Political whining is a good start, and should continue to be pursued; but until that results in actual change of leadership, it is not wholly satisfactory.
There remain small areas in which we can still make progress: geothermal heating and cooling for larger properties and micro-districts is still eligible for federal tax credits. Some small municipal and state programs — like composting, where a 2% surcharge on solid waste pays for the removal of compostable materials, resulting in an up to 20% reduction in the weight of total waste — make sense, primarily because they make sense on their own.
However, far and away the best weapon we currently have available to actually fight against Trump’s war on climate, is a regional energy transition fee.
An energy transition fee is a form of carbon fee, with the fee based on the amount of carbon in an energy product, and the proceeds of the fee are dedicated to the transition from carbon sources to renewable sources. Carbon fees have long been popular within the scientific community. Several years ago, in January 2019, the Wall Street Journal published a letter signed by 3,500 scientists stating that a carbon fee is the single best way to start to address climate change.
The Citizens Climate Lobby has been promoting a national carbon fee and dividend bill for decades. Needless to say, as terrific as the CCL bill is it is not making it to the president’s desk anytime soon.
Many states — Rhode Island, Massachusetts, and others — have, in the past, circulated state carbon fee proposals; each of which was a bit of a snowflake with respect to important terms such as pricing and use of proceeds. Often the proceeds distribution mechanisms — although filled with well-meaning intentions (buffering the effect on low-income families, for example) — were a byzantine collection of social program tinkerings. Although the states have a proud history of being the incubators of national policies (see: Clean Water Act), the previous iterations of state carbon fee bills were, as a whole, not likely to survive in the real world.
The other big issue with state carbon fee bills is border issues: what happens at the state lines if Rhode Island puts a fee on carbon, and Massachusetts and Connecticut do not, will customers buy their fuel where it is cheaper? For that reason, most state carbon fee bills require at least two adjacent states to adopt similar bills before they are implemented.
Notably, the Northeast already has some great experience in collaborating together for climate purposes. The Regional Greenhouse Gas Initiative, which includes 11 eastern states, was formed in 2005 and sets a cap on carbon emissions from power plants in the participating states.
Moreover, a carbon fee is not some kind of wholly new policy-cloth. Europe has one. Canada has one too, although in its two-part program, the very aggressive consumer fee part — $80 a ton, about 50 cents a gallon on gas, the proceeds of which funded both carbon reduction and a variety of other social purposes — was discontinued in April in response to pressure from conservatives. The industrial part of Canada’s carbon fee program continues.
A regionalized energy transition fee program — requiring at least three states as a go/no go decision point, but hopefully including others — should have two essential elements: the pricing in each state should be identical, a starting point could be $15 a ton, increasing $2 a ton each year for 10 years, and the use of the proceeds should be strictly to promote the conversion of fossil fuels usage to electricity usage, which could include solar, land-based wind turbines, geothermal heating and cooling, hydro, batteries, and grid efficiency and capacity improvements. Not insulation. Not climate change resiliency programs.
Avoiding the byzantine distribution habits of past bills is critical. We should agree that this is solely and exclusively to be deployed to stop using fossil fuels, to oppose the Trump administration’s assault on the environment, and not allow policy creep to weaken that very popular message. Although the strategy and options for each state should be individually directed based upon the unique resources they have available, the menu of agreed uses should be agreed to by all. Once all electricity in New England is from renewable sources, the uses of proceeds could shift to ancillary goals such as insulation and resiliency retrofits.
The imposition of an energy transition fee on carbon, meaning that prices for fossil fuels and related activities would increase, would not at first blush seem to be a popular idea. But consider several countervailing considerations:
The increase in price will — except for the cost of manufactured materials purchased from other states and countries — be predominantly spent on installation and maintenance costs in the region. Conversely, the use of fossil fuels means that the majority of those expenditures, except for transmission and delivery, goes out of the region. Long term — as a tide-turning investment, more dollars spent in our region, less dollars going out — that is a very healthy dynamic.
To the extent that fossil fuels are subject to market forces, and subject to the price/demand curve, the decrease in demand for fossil fuels should mean that the price for other fossil fuels that we use will go down. This has been one of the big arguments for offshore wind: the increase in supply of renewable energy and the related decrease in demand for fossil fuels should mean that the remaining fossil fuels that we buy will be less expensive.
There are quite significant health co-benefits that we will realize due to breathing less fossil fuels. There are several studies that have quantified those benefits, and they are significant.
It would promote the growth of regional renewable energy businesses.
If we can make a go of it, other regions — Virginia/Maryland/Delaware and Michigan/Illinois/Wisconsin — may be encouraged to make similar decisions.
Those countervailing considerations are important. But even if none, or some, or few of them come to pass, the real bottom line is: what will we tell our children and our grandchildren when they ask “When Trump decided to declare war on the climate in order to advance the interests of his fossil fuel contributors what did we do to stop it?”
This is an answer.
W. Bart Lloyd is a retired affordable housing attorney. He previously was general counsel at the Preservation of Affordable Housing in Boston, and prior to that was corporation counsel for Rhode Island Housing in Providence.