Group Ponders Carbon Tax Initiative (+Poll)

In an effort to make a major reduction in the state’s contribution to global warming, a group of Colorado activists are considering an initiative to enact a “carbon tax.”

The proposal, tentatively titled the “Colorado Carbon Reduction Initiative” — though suggestions for a more euphonious name are being courted — would aim for a nearly 80 percent reduction in state carbon emissions by 2050.Substantial worldwide cuts in greenhouse gas emissions are necessary to avoid major, potentially very damaging, changes in the earth’s climate. For comparison, the United Kingdom has set a goal of reducing its GHG emissions by 60 percent by 2050 (from 1991 levels). Carbon dioxide (CO2) is largest contributor to global greenhouse warming, mostly from the burning of fossil fuels. But there are other important greenhouse gases — methane, ozone and nitrous oxide, for instance — which are not addressed in the Colorado carbon tax proposal.

The proposal as currently envisioned would be “revenue neutral.” That is, while carbon sources would be taxed, other state taxes would be reduced so that little additional money would flow to state coffers, and so that state citizens would not incur any additional tax burden above what they already pay.

The group held an organizational meeting on Tuesday night, June 26, in Denver to try to begin the process of designing the program and guiding the idea to the ballot. The complexities became immediately apparent as people who all agree that something dramatic must be done about climate still couldn’t agree among themselves what that something ought to be.

Organizers Tom McKinnon, a Colorado School of Mines professor, and Sue Radford, a “semiretired engineer,” put out an initial “preliminary draft” for an emissions program that would set the carbon tax at somewhere between $3 and $11 per metric ton of carbon annually. According to a basic economic model presented by Radford, “$6 per metric ton of CO2 per year holds emissions constant.” That level represents a five cent per year increase in the cost of a gallon of gasoline, and one-half cent per kilowatt of electricity.

McKinnon says the carbon tax “promotes a least-cost, market-based reduction system.”

After a very short period of levying this tax — about ten years —  Radford says wind power becomes cheaper than coal-fired power plants. “This will kill coal, like that,” she says. Which makes it unlikely to be popular in the traditional energy markets. “You’re not going to have new coal plants,” she says. “It will make renewable energy into the Wild West.”

Also after ten years, revenue from the tax could total $6 billion, which is approximately equal to Colorado’s current income tax revenue. But the idea behind the proposal is to tax carbon emissions at the source — at the gas pump, or the electric utility. “We don’t want to make people poor, we want them to think differently about energy,” Radford says. So any funds collected in carbon taxes would be rebated to people from other state taxes that they would no longer be required to pay.

But when the meeting attendees broke into working groups, there was little agreement on how to structure the proposal. One person said, for instance, that the proposal should be more modest, and the revenue directed to assist people developing alternative energy technologies. “This renewable group needs help right now,” he said. “We need to be pro-renewable, not anti-coal.” Others argued that this is a “major restructuring,”  a proposal which is “not ready for prime time.”

“People are going to be really upset about this,” said one attendee.

The group agreed to continue to pursue the idea, however, scheduling a meeting for early August. In order for an initiative to make the November 2008 ballot, they would have to provide 76,000 signatures on authorizing petitions to the Secretary of State’s office by the end of July, 2008.