Interfaith Power & Light (IPL) supports putting a price on carbon pollution that will put downward pressure on emissions. This can be accomplished through policies like carbon taxes, carbon fees, a limited number of carbon credits sold at auction, or cap and trade systems. All of these systems help “correct” the market in which carbon pollution is essentially free. And if the revenue raised from the carbon tax or fee is invested in climate solutions like energy efficiency and renewables, there is even more benefit for the climate.
The down side of putting a price on carbon is that it can raise energy prices, which will disproportionately affect low-income people, making it a form of regressive tax. In order to address this possible negative outcome IPL advocates for an equity principle in any carbon pricing program. Such a social justice element could be an auction of emissions credits, for example, with some revenue earmarked for weatherization for low-income households (to reduce the cost of energy), or for energy efficiency programs, or green jobs training.
A price on carbon must be designed so that it rapidly cuts carbon pollution and protects low-income citizens from an unfair cost burden. It can be used in conjunction with other mechanisms such as the EPA rules on power plant emissions.
IPL supports a price on carbon as an essential step in creating a level playing field for energy production and addressing global warming. This effort can be part of an overall program to improve energy efficiency and replace fossil fuels with clean energy, which will have long-term economic, environmental and social benefits. As people of faith, we must speak up and change the current system to one that is in keeping with our responsibility to be stewards of Creation.
There are existing carbon pricing systems at the state and regional levels working now. Below are the two major programs in the U.S. that IPL supports:
The Regional Greenhouse Gas Initiative (RGGI)
This is multistate cap-and-trade program established in 2005 that covers emissions from in-state power plants that are at least 25 megawatts. Nine Northeastern and Mid-Atlantic states participate in RGGI.
RGGI held its first auction of CO2 allowances in 2008. As of 2014, RGGI has held 24 quarterly auctions, selling more than half a million allowances and collecting nearly $1 billion in auction revenue.
California’s Global Warming Solutions Act (AB 32)
California’s comprehensive climate law, passed in 2006, caps emissions economy-wide in order to cut emissions to the 1990 level by 2020. It targets greenhouse gas emissions from electricity production, fuels, cars, trucks and other sources. To achieve the reductions, the system incorporates regulations, planning, energy efficiency, renewable energy and tradable carbon credits sold at auction. California’s carbon auction is already bringing in over $1 billion per year, and 10% of the revenue is designated for programs to benefit disadvantaged, low-income communities.