By Michael Shank
Editor’s note: This commentary is by Michael Shank, Ph.D., of Brandon, who is the communications director for the Carbon Neutral Cities Alliance and the Urban Sustainability Directors Network. He writes in his personal capacity.
Economists love it. Republicans love it. Democrats love it. Big multinational corporations love it. Even activists love it. What could possibly garner that much affection? A pragmatic piece of policy that puts a cost on carbon and a price on pollution. It’s clean and simple. And in Vermont we have an opportunity to make it a reality.
The reality is that we’re already paying mightily for carbon as taxpayers. According to the International Monetary Fund, governments worldwide will pay well over $5 trillion in just one year for carbon’s costs. That includes direct subsidies to fossil fuel companies as well as costly environmental cleanups and deadly health impacts. Pollution is expensive and the cleanup cost is consistently covered by taxpayers, not the companies profiting from that pollution.
If you think that’s an absurd arrangement, you’re not alone. The Economist Magazine editorial board has consistently called for polluters to pay by putting a price on carbon – as have President George W. Bush’s Treasury Secretary Hank Paulson and former Secretaries of State James Baker III and George Shultz. Billionaire and former New York City mayor Mike Bloomberg has been calling for a price on carbon for over a decade. And even ExxonMobil, Shell and BP support one.
These Republicans, economists and multinational corporations all understand that from a market perspective you should put a price on whatever you want less of (e.g. pollution) and support or subsidize whatever you want more of (e.g. renewable energy) – not the other way around, which is what we’re currently doing in America. And the public supports this notion, too. The overwhelming majority of American citizens want to regulate carbon dioxide as a pollutant. Poll after poll keeps telling us this. So, let’s do it.
National Republican leaders, named above, have suggested starting at $40 a ton and increasing over time. Why $40 per ton? That’s the scientifically calculated cost borne by society for each ton of carbon. It’s time we share that burden more fairly.
The ESSEX Plan, which is the statewide campaign to put a price on pollutants, backed by Seventh Generation, Ben & Jerry’s and key environmental organizations, begins the pricing of pollutants at a rate of $5 per ton in 2018 and increases by $5 per ton each year until the price reaches $40 per ton. While $5 may seem small compared to what Republicans above are calling for, in the first year of implementation the ESSEX Plan would generate $30 million in electric rate reductions.
That’s a lot of money and illustrates the real win-win of such a plan. Those monies go straight back to Vermonters, providing residents and businesses with significantly lower electricity rates (e.g. 27 percent lower commercial and industrial rates), as well as rebates for families who need extra support. For example, families of four earning less than $90,000 a year, as well as rural Vermonters earning less than $75,000 individually, would get additional monthly rebates, lowering their electricity costs or travel expenses even further.
What Vermont does with the reduced carbon pollution is the biggest win. Vermont’s share of the over 200,000 American deaths each year due to air pollution is not insubstantial. Over 200 Vermonters die needlessly each year thanks to the burning of fossil fuels, according to MIT. The Essex Plan cuts Vermont’s pollution by up to 25 percent in less than 10 years and by up to 50 percent in less than 35 years. In doing so, we save lives and money. For each Vermont life saved, versus one lost to a pollution-caused death, the estimates on the productivity gains – by keeping Vermonters healthy, free from dirty pollution and contributing to society – range from hundreds of thousands of dollars to millions of dollars. This clear economic argument for kicking dirty carbon to the curb is surpassed only by the moral argument for keeping people alive.
But the gains don’t stop there. The state is currently spending between $1 billion and $2 billion each year on fossil fuel-based products. Thus, incentivizing Vermont through market mechanisms to move away from polluting products and toward a cleaner economy will be money better spent. Instead of $1 billion to $2 billion spent on products that threaten our air and water and harm our health, and require state-sponsored cleanup, those monies can instead be spent on generating thousands of new jobs in the state – up to 6,000 to be exact.
While Vermont should be lauded for maintaining America’s highest percentage of low-carbon electric generation, we can do better. If we want all Vermont utilities to reach the required 75 percent renewable energy goal in 15 years, for example, we need to lead the market transformation – and now. In doing so, we can also show the country how it’s done and lead where few states have led before. Americans are desperately looking for national and international leadership on the climate front, and Vermont has an opportunity to seize that stage and send a strong message to polluters.
There’s a reason why over 80 percent of expert economists think a market-based system (such a price on carbon) is the most economically efficient method of reducing carbon pollution. They understand the importance of market forces and support putting a price on anything that comes with negative spillover effects, such as air pollution, and investing in that which has positive multiplier effects, such as renewable energy. It’s that simple and that sensible. The Essex Plan moves us in that direction and makes clear that pollution no longer gets a free pass. It’s time to put a price on it.