CARBON CASHBACK REBATES FOR ALL RESIDENTS . . . FOR YEARS TO COME

Hawaii’s Legislature was justifiably proud of providing to all residents a rebate this year that benefits low-income families in particular.  The amount of the rebate depends on income, with those earning less than $100,000 receiving $300, and those earning $100,000 or more receiving $100.  

The Legislature will have the opportunity to do even more for Hawaii’s families in the upcoming session.  The Carbon Cashback bill would provide a carbon rebate, or cashback, to all residents.  The rebate would continue for at least a decade and increase annually.  Perhaps more importantly, the bill would help transition Hawaii’s economy toward a 100% clean, renewable energy future. 

After a 2-year ramping up of the program, Carbon Cashback would provide a carbon rebate of $360 in 2026 to all residents, regardless of income.  Adults would be entitled to a full share, and dependent children would be entitled to half a share.  The rebate would increase annually, until it would be $480 in 2036.  

The Carbon Cashback bill is silent on what would happen after 2036 because of the difficulty in making projections so far into the future.  As 2036 approaches, the Legislature would have to determine the amounts of future carbon rebates.

The funding for the carbon rebates would be generated by a carbon tax levied on companies that import fossil fuels to Hawaii.  The higher prices resulting from the tax would have the economic effect of reducing the consumption of fossil fuels.  That would reduce carbon emissions and hence the amount of greenhouse gasses in the atmosphere, helping to control climate change.  

According to a study on carbon pricing in Hawaii by the University of Hawaii Economic Research Organization (UHERO), most families would enjoy a net financial gain because their carbon rebate would be larger than the amount they spend because of higher prices resulting from the carbon tax.  In other words, this bill would help low- and middle-income families deal with the harm caused by the current inflation.

Lower-income households, compared to higher-income households, spend less on energy-intensive goods and services, so they would contribute less to carbon tax revenues.  Yet they would share equally in the carbon rebate.  Therefore, as UHERO found, Carbon Cashback would be progressive.

The UHERO study has determined that at the 2026 level of the tax,the average family in the lowest income quintile would experience a $900 net gain (in 2012 dollars).  The net gain would be smaller for households in higher income quintiles, and the average household in the highest income quintile would break even.

Visitors would contribute to carbon tax revenues because of the goods and services they purchase while in Hawaii.  Those tax revenues would be directly transferred to Hawaii’s households as part of the climate rebate.

The UHERO study has determined that a program like Carbon Cashback would not weaken the economy.  

The model on which Carbon Cashback is based has proven to be effective in Canada and elsewhere in reducing carbon emissions.  But it is not a silver bullet that would stop emissions completely. Rather, Carbon Cashback would reduce carbon emissions by 13% by 2045 if it were the only additional policy implemented to reduce emissions, and also if the carbon tax rate would continue past 2036 by following the rate schedule of the UHERO study.  The 13% reduction in carbon emissions is equivalent to taking 400,000 gasoline-powered cars off the road.

Hawaii has set a goal of net negative emissions by 2045, so other emissions reduction programs would be needed, and Carbon Cashback would work in concert with all of them.  

Recent climate data show that we have only a few years to make the drastic changes needed to avoid a global climate catastrophe.  Hawaii has been a leader in establishing green energy goals.  The Legislature has the opportunity in the upcoming session to pass Carbon Cashback and the multiple bills needed to achieve those goals.

The authors represent Citizens Climate Lobby Hawaii and the Carbon Cashback Task Force.