Principles for Fair Carbon Pricing

The MA Campaign for a Clean Energy Future developed these principles. The campaign is chaired by Clean Water Action and Climate XChange, and includes environmental organizations like 350 Mass, the Acadia Center, MA Climate Action Network, Sierra Club MA, and the Environmental League of MA, along with business organizations like the Climate Action Business Association and Environmental Entrepreneurs. The campaign is also seeking to add labor and community organizations like Community Labor United. 

Overall, the carbon fee should be effective at reducing GHG emissions, should be equitable to households, businesses, and institutions, and should strengthen the Massachusetts economy.

1. Sufficient Fee Rate

The rate per ton must eventually be high enough so that, in combination with the state’s other climate policies, Massachusetts will reach our GHG reduction mandates: 25% below the 1990 level for 2020 and at least 80% below 1990 for 2050

2. Gradual phase-in

The amount of the fee should be phased in over some number of years, perhaps five to ten, to allow households and businesses time to adjust by, for example, implementing energy efficiency and renewable energy measures

3. Economy-wide

All major sources of GHG emissions should face a significant carbon price, and each source should face a similar price where feasible. For the electricity sector, the price could be the one set through the existing cap-and-trade system, the Regional Greenhouse Gas Initiative (RGGI). Alternatively, electricity generators/consumers could be subject to the carbon fee, but with the rate reduced by the amount spent to buy RGGI allowances

4. Fully compensate most households

Low and moderate-income households should on average receive at least as much money back in rebates or tax cuts as they pay in carbon fees. 

5. Protect business competitiveness

Sufficient rebates should be provided to MA businesses that are energy-intensive and/or in competition with firms from other states or nations so that MA companies are not disadvantaged in comparison to those based elsewhere. 

6. Provide additional assistance to vulnerable households

To the degree feasible, the rebate system should provide additional protection to low-income households whose circumstances currently result in high carbon emissions, which would cause them to pay high carbon fees. For example, households whose members must drive significantly more than average due to where they live and/or work, and households with high-carbon heating fuels (fuel oil, propane). 

7. Further protect all sectors

Once achievement of principles (4), (5), and (6) is assured, most of the remaining revenues should be returned to households, businesses, and institutions (non-profit, municipal, etc. energy users). 

8. Funding for vital programs

Use a small fraction of the revenues for government programs that meet essential public needs, reduce greenhouse gas emissions, and create jobs.

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