Reducing the amount of carbon emissions we produce is paramount to combating climate change. Oil companies and other dirty fossil fuels are huge contributors to carbon emissions, greenhouse gases, and air pollution—but they have not paid for the damage they've done to our environment or our public health.
Attaching a price to carbon will finally make polluters pay for the harm they've caused while encouraging big businesses to reduce their carbon emissions and help Connecticut meet its energy targets. Pricing carbon is one of the most effective ways to help accelerate the transition away from dirty fossil fuels and towards renewable energy.
Benefits of Carbon Pricing
Accelerating the Transition to Clean Energy. If big businesses and dirty fossil fuels have to pay for the pollution they cause, it will offer a greater incentive to make the switch to solar, offshore wind, and other renewable energies.
More Accountability. When industry spews harmful greenhouse gases into the air, it hurts all of us. We've seen a huge increase in the number of children diagnosed with asthma, not to mention the toll carbon is taking on our planet. But these major polluters continue to poison our atmosphere while making taxpayers pick up the tab for the damage they do. It's time big polluters pay for the harmful effects of their actions.
Better Funding for Public Health and Clean Energy. If big businesses and polluters are required to pay a price on their carbon emissions, those funds can be directed to improving public health or increasing our investment in clean energy.
Types of Carbon Pricing
There are two primary methods of putting a price on carbon:emissions trading systems (ETS) and carbon taxes.
An ETS--also known as a cap-and-trade system--places a ceiling or "cap" on the total level of greenhouse gas emissions. Industries with low emissions could sell their allowances to businesses that produce more carbon. This would create a supply and demand for emission allowances, establishing a market price for carbon. The cap would help ensure we still lower our total emissions as a state or country, but would allow some big polluters to continue operating as normal and may not push us towards 100% clean energy as quick as other methods.
A carbon tax sets a price on carbon by defining a tax rate on greenhouse gas emissions or on the carbon content of fossil fuels. It would require every industry—including big polluters—to pay for the carbon their produce.
Other, indirect ways of more pricing carbon include fuel taxes, ending fossil fuel subsidies, and regulations that incorporate a “social cost of carbon.”
Carbon emissions can also be priced through payments for emission reductions. Private entities would be able to purchase emission reductions to compensate for their own emissions (so-called offsets) or to support mitigation activities through results-based finance.
Some 40 countries and more than 20 cities, states and provinces already use carbon pricing mechanisms, with more planning to implement them in the future. Together the carbon pricing arrangements now in place cover about half their emissions, which translates to about 13% of annual global greenhouse gas emissions.
Carbon Pricing in Connecticut
In recent years, Connecticut legislators like Rep. Jonathan Steinberg have taken the lead in trying to introduce a mechanism for carbon pricing. In order to maintain our competitiveness in the surrounding region, Connecticut legislators have partnered with lawmakers in all New England states except Maine to raise carbon pricing bills in unison. This partnership is also known as the Carbon Costs Coalition.
Carbon pricing bills in Connecticut have been introduced to compliment the Regional Greenhouse Gas Initiative (RGGI). RGGI is a cap-and-trade agreement aimed at cutting powerplant emissions.