Put a Price On It?

By Zachariah Ralph

Zach Ralph presents at a recent Green Drinks event.

Zach Ralph presents at a recent Green Drinks event.

Energy Independent Vermont uses the tag line “Put A Price on It” to promote their new CO2 tax, the ESSEX Plan. This line has been used in the past for campaigns to charge for plastic bags. The idea is to charge money for things that we typically have viewed as “free” to internalize externalities. Nothing is free, and even if we avoid charging for something like CO2 it still has an external cost. A real price on CO2 will lead to market innovation and changes in consumer trends. The best way to explore how carbon pricing works is to look at something similar; a fee on plastic bags, which, like C02, are free, but have external costs associated with them.

The cost to manufacture a single use plastic bag is around one cent, according to the plastic industry. The low cost of manufacturing the bags allows for the industry to provide a convenience to shoppers by offering this product for free. Shoppers use them without thought, taking as many as they can, double wrapping groceries, taking one bag per item, and then throwing them away as soon as they get home. Once discarded, these bags need to be transported to a land fill, which costs money, or they end up as litter, in some cases polluting our drain pipes causing blockage and disrupting the treatment and transportation of water. Cities like New York spend millions of dollars annually transporting plastic bags and repairing their water drainage systems, and these costs are passed back onto the tax payers. The damaging impacts of climate change is also an external. So, despite what we may all think, plastic bags aren’t free, the plastic industry just makes taxpayers pay for their production and end life.
In a free market economy when something is too expensive and no longer becomes competitively viable, then we see our economy respond. Consumers will change their behavior to avoid spending more money, and the industries will respond by innovating to create something else. In the case of plastic bags, industries started to produce low cost reusable or biodegradable bags and consumers then started using them instead of the plastic ones. In most examples where a plastic bag fee was implemented there was a drastic reduction in plastic bag usage in a short period of time. In San Jose California where a fee was placed on plastic and paper bags, “(o)bservation records show that reusable bag use increased greatly following the implementation of the ordinance, from almost 4 percent of bags observed to approximately 62 percent of bags observed.”
A price on C02 emissions, like a charge for plastic bags, is a market tool which has been proven to have similar and effective results. Many economists are strongly in favor of putting a price on carbon and many states, including Vermont, are now considering adopting carbon pricing mechanisms. One carbon pricing proposal is from the Citizens Climate Lobby (CCL). CCL has proposed and is building support for a federal Carbon Fee and Dividend (CF&D) policy. CCL is a non-profit, non-partisan, grassroots advocacy organization. They train volunteers and build relationships with elected officials, the media and their local community.
CF&D is a revenue neutral proposal on CO2 emissions starting at $15 per ton and increasing 4% annually. All revenues, minus administrative costs, are designed to go back to the tax payers, and they are also proposing a border tariff against countries which do not have a carbon tax. The CCL believes that their proposal will help create 2.8 million new jobs and will be a huge stimulus to our economy. According to their website the “Carbon Fee and Dividend does not increase the size of government, require new bureaucracies or directly increase government revenues. The dividend increases real disposable income, protects personal spending decisions and will recruit widespread, sustained engagement.”
Sustainable Woodstock is excited to bring Vermont resident and CCL volunteer, Chris Rowe, to come and speak about the CF&D proposal at our monthly March Green Drinks social. Join us for an informative presentation, to ask questions and discover ways to get involved. Green Drinks is on Thursday, March 15th from 4:30-5:30 at Worthy Kitchen in Woodstock. The presentation is free and refreshments will be provided. For more information contact Zach Ralph at zach@sustainablewoodstock.org

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