A new state-sponsored report concludes that slapping a multibillion-dollar “carbon tax” on all fossil fuels used in the state — including oil and natural gas to heat homes and gasoline to power cars — would be an effective way of cutting carbon pollutants blamed for accelerating climate change.
Prepared by private consultants on behalf of the state Department of Energy Resources, the report emphasizes that any new carbon tax or fee imposed on fossil fuels should be offset by tax cuts or some rebate to consumers in order to make the new carbon charge “revenue neutral.”
But the message of the report was clear: Deliberately hiking the price of petroleum products, via a new tax, would force many residential consumers and businesses to reduce their consumption of gasoline, heating oil, natural gas, and other fossil fuels at home and at work.
Under various models, the report said a phased-in new tax could raise about $1.75 billion by 2020, or nearly 7 percent of current state revenues, and could rise to somewhere between $2.5 billion and nearly $5 billion by 2040. The report acknowledged the state’s economic growth could take a hit under some circumstances.
But a carbon tax could lower carbon emissions by 5 to 10 percent by providing a “simple and transparent” way to finally put a price on emissions of carbon pollutants by burning fossil fuels, the report said. It didn’t endorse specific tax levels.
The report’s findings are sure to spark intense debate across the state. Steve Dodge, associate director at the Massachusetts Petroleum Council, a trade group in Boston, said a carbon tax “makes no sense” at a time when electric prices are rising in New England and motorists are finally getting a break at the pumps. “It’s going to harm consumers,” he said.
A global oil glut has pushed the average gasoline price in Massachusetts below $2.70 a gallon., but many electric customers are getting whacked with double-digit rate increases tied to rising costs of natural gas used by power plants to generate electricity.
State Senator Michael Barrett, a Lexington Democrat who has sponsored carbon tax legislation, praised the report for spelling out how “carbon pricing” can be used to protect the climate. He called a carbon tax the “single most effective way” to battle climate change.
Governor Deval Patrick, whose administration spent nearly $150,000 for the report, is stepping down from office next month. Patrick is neither taking any position on a carbon tax nor filing a carbon tax bill before leaving office, said Mark Sylvia, Patrick’s undersecretary of energy.
The report is meant to “provide information for future policy discussions,” Sylvia said.
That means the report is getting dumped on the lap of Patrick’s Republican successor, Governor -elect Charlie Baker, who campaigned last fall against raising taxes. A Baker spokesman was noncommittal yesterday about the new carbon tax report’s findings.