Talking Points

The State Economic Efficiency and Pollution Reduction Act would:

• Assess an $X/ton pollution tax imposed on the carbon-content of all fossil fuels used for personal or commercial consumption or out-of-state electricity generation for in-state consumption;
• Allow for an X-year phase-in of the pollution tax to minimize the impact on consumers and industry;
• Create an exemption for renewable fuels and electricity derived from renewable sources such as solar power, small flow hydro-power, biomass, ethanol, etc.;
• Generate an estimated revenue of $X that will be used to reduce/eliminate various inefficient income and payroll taxes levied on consumers and businesses; and 
• Use money from unclaimed or excess tax credits to fund the Renewable Energy and Energy Efficiency Fund.

• Most Americans think of electricity as “clean” energy and are shocked to learn that power plants are the single worst industrial contributor of air pollution in the U.S. 
• Nationally, power plants contribute 40% of man-made carbon dioxide emissions, 76% of sulfur dioxide emissions, 59% of  nitrogen oxide emissions, and 37% of mercury emissions. (Natural Resources Defense Council)

Automobile emissions exacerbate the problem.

• Due to federal reluctance to raise the Corporate Average Fuel Economy (CAFÉ) standards, states must take the initiative in reducing the volume of harmful emissions released by automobiles. 
• Assessing a carbon tax on gasoline and diesel fuel is a visible reminder to consumers that fossil fuel emissions create environmental damage and that efforts should be made to conserve whenever possible.
• Cars, sport-utility vehicles, and other light trucks emit 20 percent of the nation’s CO2 pollution. (Sierra Club)
• If U.S. autos were a separate country, they would be the world’s fifth largest contributor to global warming, emitting more CO2 than all sources in Great Britain combined. (Sierra Club)

Carbon dioxide emissions are the single largest factor in global climate change.

• Carbon dioxide emissions account for over 50% of human greenhouse gas emissions and its share of these emissions is growing more rapidly than any other harmful gas.
• A carbon tax would help to reduce many of the problem emissions (NOx, SOx, and mercury), not just carbon dioxide, because these compounds are often found together in fossil fuels. As a result, a carbon tax serves as a proxy for a tax on many harmful pollutants.

• Currently available technology upgrades for such things as lighting, insulation, windows, appliances, and air conditioning can significantly reduce home or business energy costs and keep millions of tons of carbon dioxide out of our air each year.
• A carbon tax would create incentives for homeowners and businesses to modernize using energy-efficient technologies. Many energy-efficient products pay for themselves within a few years.
• According to the U.S. Department of Energy, efficiency improvements for lighting, windows and air conditioning in commercial buildings would reduce energy bills by $75 million annually. 

Carbon dioxide and fossil fuels emissions have a serious impact on human health.

• Carbon dioxide and other fossil fuel emissions are major contributors to many respiratory diseases such as asthma. Recent studies have found that smog can actually precipitate asthma in children who would not otherwise contract it.
• Greater global temperatures are also expected to be followed by an increase in the spread of infectious diseases.

• By raising energy costs in the short run, we encourage investment in alternative energy sources and energy-efficient technologies – both of which offer substantial long-term economic benefit.
• As we invest in energy-efficient technologies, our demand for energy decreases. As our demand for energy falls, so do our energy bills. Over a period of as little as five to ten years, these cost savings can be significant.
• Because the world’s reserves of fossil fuels are finite and shrinking rapidly, we will necessarily transition away from them and toward alternative energy sources at some point in the near future. 
• States which make investments in alternatives early, while these technologies are relatively new, will stimulate job creation and business development and become the pioneers in what is sure to be a major national, and even global, energy revolution.

• In a recent poll, more than 70% of Americans were supportive of reform that shifts tax burdens away from payroll and income taxes and toward polluters.
• As states face mounting fiscal crises in the wake of the recent recession, emphasis must be placed on eliminating existing inefficiencies in the tax code. Payroll and income taxes are widely viewed by economists as inefficient and they discourage behavior which society should be encouraging – investment in labor and the growth of personal income.
• As frustration with taxes that make little sense increases, economic conditions worsen, and threats to people and the environment caused by global warming become better understood, states are in a unique position to lead reform efforts designed to improve the quality of our air, reduce public health risks, and create pricing systems that penalize polluters, encourage conservation, and eliminate current taxes that discourage job growth.

• This bill uses the market system to prompt cuts in emissions through price incentives.
• A carbon tax better addresses diffuse pollution sources than regulatory approaches.
• Unlike regulatory policies, a carbon tax provides maximum flexibility in deciding when, whether, and/or how to achieve reductions in energy use or emissions. 
• A carbon tax is assessed on producers and consumers in direct proportion to their energy use and resulting carbon dioxide emissions.
• Fossil fuels are the third most heavily subsidized economic sector after road transportation and agriculture. Our current tax system actually encourages energy producers to pollute.
• Current pricing systems induce consumers to use more energy than they might were they required to pay the full social costs associated with energy consumption. 
• Imposing a carbon tax increases the relative affordability of cleaner alternative energy sources. 

A carbon tax generates revenues that can be reinvested in efficient ways.

• Revenues from a carbon tax can be used to eliminate or reduce existing inefficient tax burdens such as payroll taxes, consumption taxes and/or income taxes.
• This process allows us to increase the overall efficiency of the tax code by eliminating or reducing those taxes which are most inefficient.

A carbon tax is needed to ensure that polluters pay.

• The costs associated with pollution, such as environmental damage and human health risks, are not reflected in current energy prices.
• This proposal makes polluters pay while giving the ordinary state resident a tax break.
• Higher energy costs provide businesses and homeowners with the incentive they need to bring about efficiency improvements that will quickly pay for themselves.
• While higher energy prices will be portrayed as a burden on consumers, the additional energy costs associated with a carbon tax will be returned to consumers and businesses in the form of income and payroll tax reductions. 

The time to act is now.

• Global warming is a real threat and its effects are already being felt.
• While the federal government refuses to regulate carbon dioxide, increase fuel efficiency standards, or work with our allies toward a global climate change treaty, the burden for reducing greenhouse gas emissions, in particular, carbon dioxide, falls to the states.
• In times of wealth most changes in the tax system are focused on cuts. However, as 45 of the 50 states find themselves facing budget shortfalls, now is the time to address existing inefficiencies in the tax code and to shift the tax burden on to those who conduct activities that society wishes to discourage, such as pollution.
• Through the Pollution Reduction Act states now have the opportunity to pass legislation that protects our environment and improves public health. In so doing, states will serve as innovators in the national and international debate over climate change while reaping economic rewards for its citizens.

Left unmitigated, the effects of climate change could be devastating to our economy and our environment.

• Even small changes in our climate can have drastic effects on our natural environment. Rising sea levels, worsening weather conditions, the increase of extreme and dangerous weather events, and the shrinking of our nation’s few remaining glaciers have been attributed to the climate changes associated with rising carbon dioxide levels.
• These environmental and ecological changes create severe problems for agricultural areas which require cyclical stability for maximum production.

Climate change is real.

• In 1995, the Intergovernmental Panel on Climate Change (IPCC), which consists of the world’s leading climate change experts, concluded that “[t]he balance of evidence suggests that there is a discernible human influence on the global climate.” This was the first time that a direct scientific link was made between human activity and global warming. (Intergovernmental Panel on Climate Change)
• In its 2001 assessment, the IPCC strengthened that conclusion considerably saying, “There is new and stronger evidence that most of the warming observed over the last 50 years is attributable to human activities.” (Intergovernmental Panel on Climate Change)
• Seven of the ten warmest years in the 20th century occurred in the 1990s – 1998 was the hottest year since reliable instrumental temperature measurements began.
• Warming in the 20th century is greater than at any time during the past 400-600 years.
• During the last 100 years, the atmospheric concentration of carbon dioxide has increased by 31 percent. (Union of Concerned Scientists)
• Rising global temperatures may lead to more – and more intense – extreme weather events such as heat waves, floods, and tornados, which already kill thousands of people per year.