Research & Commentary: Renewable Energy Mandate Expansion, Carbon-Dioxide Tax Would Make Life Harder for Low-Income Washingtonians

Carbon-dioxide taxes are inherently regressive and disproportionally harm low-income families. The Congressional Budget Office (CBO) found a $28 per ton carbon tax would result in energy costs being 250 percent higher for the poorest one-fifth of households than the richest one-fifth of households.

CBO reports the reason for cost discrepancy is “a carbon tax would increase the prices of fossil fuels in direct proportion to their carbon content. Higher fuel prices, in turn, would raise production costs and ultimately drive up prices for goods and services throughout the economy … Low-income households spend a larger share of their income on goods and services whose prices would increase the most, such as electricity and transportation.”

The Washington Policy Center estimated the I-1631 carbon-dioxide tax would increase average household costs between $234 and $305 in the first year alone, and between $672 and $877 per year after 2030. Costs for the newly-proposed tax would be similar and would take $7.879 billion away from Washington drivers over the next decade.

One other substantial problem with the carbon-dioxide tax is that it would produce an insignificant environmental benefit, as Oren Cass, senior fellow at the Manhattan Institute, noted in National Affairs. “The effectiveness of a carbon tax as a matter of environmental policy [depends] not only on how it would directly alter the trajectory of [local] emissions but also on its ability to affect global emissions by driving globally applicable technological innovation or by influencing the behavior of foreign governments,” wrote Cass. “On each of these dimensions, the carbon tax fails.”

Thanks to its copious hydroelectric power sources, the Evergreen State currently has some of the lowest retail electricity prices in the United States (7.68 cents per kilowatt hour). Moreover, a 2018 WalletHub study reports that only Colorado has lower total energy costs than the Washington. Legislators should refrain from taking any action that would increase the prices.

The higher energy costs guaranteed by a switch from fossil fuels to higher-cost “renewable” electricity sources, such as wind or solar, lead to slower economic growth. Affordable energy is the key to productivity growth and the production of virtually all goods and services. At the same time, a carbon-dioxide tax would make everything more expensive for working families in Washington, raise costs for businesses, and have an insignificant effect on global CO2 emissions. For the good of all Washingtonians, legislators should reject these two proposals and move to abolish the Renewable Energy Standard altogether.

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