A new study says a carbon tax in the state would create between 2,000 and 4,000 jobs, as well as create up to $900 million in state revenue by 2040. Scott Nystrom, a senior economic associate and project manager for Regional Economic Models, Inc. presented the study’s findings at Brown University.
Sponsored by the Energize Rhode Island Coalition, REMI’s study examined the possible benefits and consequences of instituting such a tax in the state.
Introduced this year, the Carbon Pricing Act has been tabled for the session but will be resubmitted next year. The bill, if passed, would be the first of its kind in the United States, setting an environmental standard for the rest of the country. More information can be found here.
Energize Rhode Island is currently promoting the Clean Energy Investment and Carbon Pricing Act, which would impose a carbon price (or tax) on all fossil fuels at the first point of sale within the state. The price would be $15 per ton of carbon dioxide for the first year the act is in effect, and raise at a rate of $5 per year.
The Carbon Pricing Act has two main goals – to provide a disincentive for using fossil fuel revenue to compensate for the cost of moving toward green energy. The price would be returned to Rhode Island’s economy in four different ways: a dividend check to households, a dividend to employers based on their share of state employment, a fund for energy efficiency costs, and administrative overhead.
According to REMI’s analysis, Rhode Island would receive positive benefits from implementing a carbon price.
“You actually have more jobs in Rhode Island that you would have otherwise with this policy,” Nystrom said during his presentation. Although the impact is relatively small, only around 1 percent of the jobs in the state, that’s still 2,000 to 4,000 jobs that were not there before. The Coalition says 1,000 of these jobs would be created within the first two years of the price’s introduction.
Total gross state product would rise as well, with the construction industry gaining roughly $86 million. The only industry that takes a serious hit due to the price is chemical manufacturing, which would lose $16 million. Real personal income would also increase between $80 and $100 million dollars during that time.
Nystrom also explained that instituting a carbon price could result in a population increase.
“Because the labor market is stronger, it draws more people to the state to an extent,” he said. “They move into the state as a consequence of the labor market, they buy a house, they settle down, and they increase the state’s population.”
With all of the new jobs and people living in Rhode Island, state revenues would be on the rise as well, earning between $200 and $900 million through the 2030s.
For all these benefits, cost of living would only increase minimally.
“Even though this does increase the cost of energy for states, It’s about a half a percent,” Nystrom said. “This means you have three months of extra inflection between now and 2040 than you would have otherwise.”
Carbon emissions were not the main focus of the study, but Nystrom did add that they would decrease over the course of a few years, and then stabilize.
“Emissions are purely a byproduct,” he said. “This is a result of the model.”