Carbon pricing targets large energy users

Much to the chagrin of high-energy-use companies, Rep. Aaron Regunberg, D-Providence, is looking to assess a fee on the sale of all fossil fuel in Rhode Island.

Regunberg in January filed a bill calling for carbon pricing, claiming one way the state could combat climate change would be to wean it off its reliance on fossil fuel.

An assessed fee, similar to a tax, to be paid by energy suppliers and producers, he says, could bring cheaper and dirtier energy resources closer in line with more expensive, alternative options, such as renewables. The shift would incentivize businesses and consumers to consider using more environmentally friendly energy resources.

“We need to think big and take big action,” Regunberg told Providence Business News. “The debate over climate change is settled. We know what’s happening. We know that if we fail to take this seriously and take significant climate action, we’re going to be condemning the children of today to a very dangerous future.”

- Advertisement -

The legislation, dubbed Energize Rhode Island: The Clean Energy Investment & Carbon Pricing Act, is supported by a coalition of so-called “clean energy” advocates, but the likelihood of it garnering immediate support on Smith Hill is slim. Critics, including TEC-RI Executive Director Douglas Gablinske, whose association members comprise some of the largest users of energy in the state, say it would have a negative effect on all Rhode Island businesses.

“Rhode Island isn’t an island, even though it’s called ‘Rhode Island,’ meaning we have to operate in a local economy, a regional economy and a worldwide economy,” Gablinske said. “If this were to pass in Rhode Island only and not in any neighboring states, or those throughout the country, it would have a detrimental effect on all business and their ability to compete.”

Indeed, while assessing a fee on carbon is being considered in countries around the globe, the World Bank in 2014 reported Chile and South Africa as the only two places where a carbon tax has been implemented.

A more common system of carbon pricing, however, is an emissions trading system, known better as a cap-and-trade system. The method places a cap on the total level of greenhouse gas emissions within a trading system, but allows emitters the right to buy and sell allowances within the participating region.

In the mid-2000s, several New England states and Canadian provinces joined an initiative called the Regional Greenhouse Gas Initiative, which is a cap-and-trade system for CO2 emissions from power plants in member states. Rhode Island joined the initiative in 2007 and is currently one of nine states trying to reduce emissions by 10 percent between 2015 and 2020.

Regunberg’s legislation would take RGGI a step further.

Indeed, the plan to assess a fee on the sale of fossil fuel, which includes coal, oil, natural gas, propane and any other petroleum product, but excludes renewable biomass and waste vegetable oil biodiesel, is unlike any other carbon-pricing proposal in the world, according to Regunberg.

A proposed fee of $15 per ton of carbon dioxide equivalent would generate an estimated $140 million revenue in its first year, according to Energize RI, which would go toward a “clean energy and jobs fund” to invest in renewable energy and efficiency programs for Rhode Island families, small businesses and institutions.

Forty percent of the revenue would be paid out like a rebate to households and businesses, based on a sliding scale of how much carbon they produce. Thirty percent would go toward state employment, 25 percent would go toward weatherization and energy-efficiency programs and 5 percent would cover overhead costs, according to the legislation.

The distribution plan for that revenue, however, does little for companies using large amounts of energy.

Bill McCourt, executive director of the Rhode Island Manufacturers Association, says his members would likely end up losing out the most, because passing on the cost of the assessed fee to Rhode Island customers would increase overhead costs.

“[Energy companies] would pass along as much of the [assessed fee] as they could reasonably get away with and if it’s all of it, it’s all of it,” he said.

Carbon pricing proposals have failed to win General Assembly support in the past.

House Speaker Nicholas A. Mattiello hasn’t taken a public position on Regunberg’s legislation. If Regunberg fails to win support this year, he’ll keep trying.

“It’s true that big, ambitious proposals don’t always happen right away, but if we can’t make it through this year, I’ll bring it back,” he said. •

No posts to display