RFF Issue Brief Examines State-level Carbon Pricing
RFF recently published research on the potential for state policy to offset some of the damages done by the recent budget reconciliation bill, with a focus on state-level carbon pricing.
The study models the impact of carbon pricing on household electricity costs in eight leadership states without a carbon price: Arizona, Colorado, New Mexico, Illinois, Michigan, Minnesota, Wisconsin, and North Carolina.
The modeled emissions target would reduce carbon dioxide emissions from the electric power sector to 80% below 2005 levels by 2030. The study finds that every state modeled can use carbon pricing to achieve environmental goals and reduce household electricity costs.
In order to reduce household electricity bills, RFF suggests--guess what?--rebating the revenue from the tax. Returning carbon revenues to households would result in an average 6% reduction in electricity prices and a net reduction of $92 on annual electricity bills. This is double the savings from the IRA alone.
A comment from the peanut gallery: I can see how the focus on reducing electricity bills might resonate in the present political moment. On the other hand, taken by itself, a savings a few dollars per month doesn't seem like a great accomplishment. In Colorado, where I live, the state constitution would make it a heavy political lift to enact a carbon price. I doubt that $92 per year in (net) savings would make it attractive enough, although could still be worth a try. Maybe it would be easier in some other states to adopt some of RFF's suggestions.
H/T @K.K. DuVivier for the pointer to this work.
There's more to say about the study, but this is enough for now. Find it here:
Thanks for flagging, @David Kline. I also posted about the paper on the Nerd Corner, but this forum is a good spot for it too 🤓
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