Capping Carbon, Not Jobs

Sheldon Zakreski, The Climate Trust
As published by CaliforniaCarbon.info – March 7, 2018

Bipartisan support for capping carbon grows with evidence of economic development

Climate change is something political pundits refer to as a wedge issue. Indeed, a Pew Research poll a few years ago found that while 72 percent of Democrats favored an urgent response to reduce carbon emissions, only 24 percent of Republicans agreed. While this divide may help explain inaction at the Federal level, a strange phenomenon is happening in states that already have carbon price policies. State level Republicans are not only voting in support of extending programs, but also making reduction requirements steeper.

Last year, eight out of 33 California State Republicans voted to pass a bill extending the State’s cap and trade market through 2030 after it was set to expire in 2020. The State of Maine, where both houses of government are evenly split between Democrats and Republicans, overcome opposition from its Governor to unanimously pass a bill keeping the state in a regional cap and trade market for electric utilities. This vote is all the more surprising considering that the program’s stringency will increase and mandate a 2.5 percent annual reduction when the extension kicks in, over the current 2 percent annual reduction requirement.

What explains this bipartisan support? As former President Clinton once said, “It’s the economy stupid.”

In Maine, the deployment of $54 million in cap and trade funds attracted an additional $88 million in private investment in the energy sector. Therefore, for every dollar the state collected and put back into the economy it generated another $1.63 in private investment. It gets better. The combined $142 million in investments produced $277 million in energy cost savings for Maine households and businesses. It’s hard to argue with a program that brings in outside investment and makes citizens richer and businesses more competitive, even if it’s designed to price and lower carbon emissions.

Earlier this year, California Assemblyman Devon Mathis one of the eight climate friendly Republicans, reported that farm and agriculture-related businesses in his district have received more than $54 million in cap and trade funding. Such funding will attract additional outside investment allowing these businesses to invest in technologies that will lower their total energy bills despite unit price increases at the pump.

This is the rub. We always hear about how cap and trade will increase the cost of electricity and petroleum. While that’s not in dispute, if the funds collected are redistributed wisely then the overall cost of energy will go down. This is how state governments can make their businesses more competitive and lower emissions at the same time. Economic development is something everyone, regardless of political stripe, can agree on.

There is plenty of available real world data that cap and trade programs deliver for the economy, the environment and individuals—perhaps connected to this movement towards bipartisanship at the state level. It would benefit all political leaders to take a hard look at the evidence and not get sidetracked by outdated political scare tactics around rising costs that have not been born out in practice. The first step on the road to progress is for leaders (including those in Oregon) to overcome their fears and finally put a price on carbon by adopting a cap and trade program. Until now, the rally cry has been an urgency to act for the sake of our environment. I don’t dispute that, but there is also an urgency to act for the sake of improving the competitiveness of businesses and the living standards of its citizens.

Image credit: Flickr/U.S. Department of Agriculture