Climate change requires urgent, effective action

Atmospheric carbon dioxide concentrations continue to rise (it reached 420 PPM recently) and global warming is creating havoc across the planet. The consequences are impossible to ignore and will only worsen. The latest IPCC report reinforces the need for action and reminds us about what is at stake. When it comes to action the IPCC report says: “Pricing of greenhouse gases, including carbon, is a crucial tool in any cost-effective climate change mitigation strategy, as it provides a mechanism for linking climate action to economic development.” For more on what the latest IPCC says about carbon pricing, please click this link.

Carbon Cashback (HB2278) will deliver emission reductions consistent with Hawaii’s goals

Hawaii has declared a climate emergency and set a goal to be carbon neutral by 2045.  If it is to do so, it needs to reduce emissions economy-wide.  It needs a policy that addresses emissions in all sectors. A price on carbon will achieve a market-wide influence on fossil fuel consumption.

HB2278 complements and strengthens other emission reduction policies

The carbon cashback policy (HB2278) strengthens other environmental policies aimed at reducing emissions - it will complement other environmental policies aimed at reducing carbon emissions.  As we’ve seen in this legislative session, there are several bills dedicated to mitigating climate change. This is necessary as there isn’t one solution to the problem. Policies to reduce emissions, increase efficiency, sequester carbon, and implement adaptation strategies are all important. Pricing carbon is a policy that will magnify the impact of these policies while ensuring an equitable transition for low to moderate-income households.

Carbon pricing is progressive and benefits low and middle-income households

In fact, all households on average do better if 80 to 100% of the revenues are returned to people.   According to the UHERO study, the majority of Hawaii's families would experience a net financial gain, as their refundable tax credits would more than compensate for the increase in prices resulting from the carbon tax. 

Carbon pricing is good for business

A gradually rising price on carbon pollution, as proposed in HB2278, allows for predictability so businesses can better plan. Knowing that prices for energy and fuels will rise in a measured way each year allows business leaders to plan and budget for measures to increase efficiency and reduce consumption. It offers flexibility in their response – they can maximize resources by implementing energy efficiency measures, deploying renewables, and cutting fuel consumption.

HB2278 is easy to implement

HB2278 follows the recommendations outlined in the recent Tax Review Commission Report. Rather than create new processes, this policy will leverage existing mechanisms, i.e., the existing barrel tax and taxation system, to apply the carbon fee and return the revenue to households. This policy will not grow the government.

Carbon pricing policy works in the real world

British Columbia implemented their carbon tax in 2008, and it is currently at $45/ton. Studies have shown that it had a minimal impact on their economy while reducing emissions between 5 and 15%.

Sweden implemented a carbon tax in 1991 and has the highest price globally at $137/ton. It reduced its emissions by 25% by 2000. At the same time, its economy grew by 60%.

Carbon pricing will encourage investment and innovation in clean energy solutions. The EU’s carbon price has been cited as one of the main reasons electric vehicle penetration in Europe far exceeds that of the US (Climate Now podcast 2/25/2022). Furthermore, Metcalf and Stock find that the EU’s carbon price has a very negligible impact on its overall economy.

Carbon pricing is popular

Placing a price on carbon pollution has been endorsed by thousands of economists, former Chairs of the Federal Reserve, the US Chamber of Commerce and Business Roundtable, prominent religious groups, Pope Francis, and many prominent individuals and businesses.

Hawaii’s leaders endorse national carbon legislation. In the current Congress, Senator Brian Schatz has introduced Save Our Future Act (a carbon pricing bill) and Representative Kai Kahele co-sponsored a prominent carbon pricing bill, HR2307.

The IPCC supports carbon pricing

The IPPC reports says: "There are several advantages for environmental taxation including environmental effectiveness, economic efficiency, the ability to raise public revenue, and transparency (very high confidence). These gains can provide more resource-efficient production technologies and positively affect economic competitiveness (Costantini et al., 2018)"