A new study finds a statewide carbon tax would allow Oregon to reach its emissions reduction goals with little economic harm.
The Northwest Economic Research Center at Portland State University spent eight months examining the economic and environmental effects of a carbon tax in Oregon. Researchers considered taxes between $10 a ton and $150 a ton on greenhouse gas emissions from transportation fuels, natural gas for heating and fossil fuels used to generate electricity.
They found a statewide tax of $60 per ton of carbon emissions would get Oregon to its goal of reducing carbon emissions to 10 percent below 1990 levels by 2020. At that level, the tax would also raise $2.3 billion in revenue.
The study analyzed the impacts of numerous carbon tax scenarios on 70 different industries. When it comes to jobs, household incomes, and corporate bottom lines, it found minimal impacts overall. It also found even those impacts could be offset by spending the carbon tax revenue on new road projects and tax benefits for individuals and corporations.
"Frankly, the economic impacts we see in even our most pessimistic scenarios are pretty small," said Jeff Renfro, senior economist with the research center and co-author of the report. "You can do something good for the economy and good for the environment at the same time."
Retail businesses and the food-service industry would be hardest hit by a carbon tax, the study found, because they're at the end of the supply chain and would end up passing on the cost of a carbon tax to consumers in the form of higher prices.
Low-income households would also be hard hit because they spend a higher proportion of their income on energy.
Renfro said a carbon tax could be designed to provide assistance to low-income households, and the revenue from the tax could be used to help the industries that are most negatively impacted. But leaders would have to prioritize when deciding who gets help.
"You can address the negatives, but you can't address all of them at once," he said. "It's going to be tough to completely offset the negative burden on low-income households at the same time as offsetting all of the negative industry impacts."
For consumers, Renfro said gave a few examples of how carbon pricing would play out:
Renfro's numbers ranged the most for a carbon tax's electricity costs because they vary depending on how each utility sources its electricity. For some, carbon free energy from hydrodams are a big part of the mix. Other utilities deliver electricity from burning coal and natural gas.
The study was commissioned by the Oregon Legislature last year. Researchers presented the results to several legislative committees in Salem on Monday.
Northwest Economic Research Committee Director Tom Potiowsky told lawmakers the study found employment in Oregon would continue to grow regardless of whether the state has a carbon tax.
"Implementing a carbon tax does not cause overall negative job growth, but it causes possibly a drag on the growth that we would expect," he said.
Potiowsky said there are still a lot of decisions to be made about how a statewide carbon tax would be designed an implemented. He told lawmakers it will likely be up to states to take action on reducing carbon emissions.
"I don't think states should be waiting of the federal government to come and make up some policy," Potiowsky said. "I think it's going to be us as first movers, and I think there will be advantages to us of being first movers because this is eventually going to be a global policy that's going to be happening."
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