The Leaflet: The High Cost of Green Energy
Carbon dioxide taxes and renewable energy mandates result in higher electricity bills for ratepayers. Lawmakers should reject taxes and mandates to boost renewables and suppress fossil fuels.
In state capitols across the nation, lawmakers are proposing stringent environmental regulations that are mollifying environmentalists and galvanizing their opponents. Most of these proposals are intended to reduce carbon dioxide, which is emitted when fossil fuels (coal, natural gas, and oil) are burned. To curb these emissions, activists have pressured politicians to pass rigid restrictions on fossil fuels. Politicians have responded by drafting legislation that would institute renewable energy mandates (REM) or tax carbon dioxide.
REMs require a certain percentage of electricity generation within a state to come from renewable energy sources such as wind and solar. Currently, REMs exist in 29 states and the District of Columbia. Carbon-dioxide taxes levy a fee, adjusted for rate of inflation, on each metric ton of carbon-dioxide emitted. No states currently have carbon-dioxide taxes.
Despite unwarranted environmental concerns, fossil fuels have allowed the development of revolutionary technologies, lifted billions of people from abject poverty, and overwhelmingly power our comfortable, modern lifestyles. The world has adopted natural gas, oil, and coal because they are cheap, abundant, and reliable—the antithesis of renewable sources.
Regardless of these facts, lawmakers continue to push mandates and taxes on fossil fuels in Hawaii, Massachusetts, Montana, and Washington State.
In Massachusetts, lawmakers are considering a bill that would require in-state utilities to generate 35 percent of their electricity from renewable sources by 2030 and 100 percent by 2045. These lawmakers are also considering a bill to establish a $20-per-ton carbon-dioxide tax, which will rise by $5 per ton each year until it caps at $40 per ton.
Similarly, Washington State legislators have proposed strengthening the state’s existing REM to 100 percent of renewable generation by 2045. The legislation would also ban coal in the Evergreen State by 2025. Another proposal would establish a $15 tax per ton on carbon-dioxide emissions. Interestingly, 56 percent of Washington voters opposed a ballot initiative in 2018 to establish a $15 tax on carbon dioxide.
According to the Congressional Budget Office (CBO), a carbon-dioxide tax is regressive and imposes a larger burden on lower-income households. CBO also projects any carbon-dioxide tax would cause reductions in labor supply and investment.
“Unsurprisingly, in states with renewable power mandates, energy rates are rising twice as fast as the national average,” wrote Heartland Policy Analyst Tim Benson. “According to EIA, the 29 states with renewable energy mandates (plus the District of Columbia) had average retail electricity prices of 11.93 cents per kilowatt hour (cents/kWh), while the 21 states without renewable mandates had average retail electricity prices of just 9.38 cents/kWh.”
Contrary to popular belief, air quality in the United States has improved in recent years. Hence, lawmakers should reject taxes and mandates to boost renewables and suppress fossil fuels. The unintended consequences of these misguided and unnecessary proposals are that they stifle economic growth and increase prices of virtually all goods and services.
Before prematurely writing off fossil fuels, lawmakers should read Climate Change Reconsidered II: Fossil Fuels’ “Summary for Policymakers,” which provides a scientific and economic analysis of the costs and benefits of fossil fuels.
What We’re Working On
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In this Research & Commentary, State Government Relations Manager Lindsey Stroud examines a new study that finds electronic cigarettes and vaping devices to be “twice as effective as nicotine replacement at helping smokers quit.”
School Choice in New Hampshire is Under Attack
In this edition of the Heartland Daily Podcast, Michelle Levell, director of School Choice for New Hampshire, joins Heartland’s Project Manager for Transforming Education, Lennie Jarratt, to discuss the New Hampshire legislature’s attempt to repeal the state’s education tax-credit that serves nearly 900 students, the majority of whom are low-income or have special needs. Levell relays stories of scholarship students escaping racial and religious bullying by teachers, staff, and students, as well as stories of scholarship students now excelling and planning on attending four-year universities.
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From Our Free-Market Friends
How Much Does Your State Collect in Sales Taxes Per Capita?
Tax Foundation has released a map that ranks states based on their tax collections per capita. Forty-five states and the District of Columbia collect sales taxes at the state level, while five— Alaska, Delaware, Montana, New Hampshire, and Oregon—do not. In 2017, Hawaii, the District of Columbia, Washington, Nevada, South Dakota, and Florida had the highest state sales tax collections. On the other hand, Virginia, Colorado, Alabama, Georgia, and Missouri had the lowest collections per capita. In recent decades, purchases of services have increased while purchases of goods have decreased as a share of total U.S. personal consumption. Therefore, total tax revenue has declined because many states exempt consumer services from taxation.
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