By Marissa LaFave
Copy of a recent article in the recent Natural Awakenings Magazine, Boston Edition.
Business owners are already feeling the effects of climate change firsthand, especially in New England where record-breaking snow levels this winter led to significant losses in business. Along with several travel bans and school closings came a 6.2 percent decrease in spending in Boston during January and February, with total storm related costs in the Northeast reaching upwards of $1 billion. This winter has reaffirmed the need for widespread climate action, because as global temperatures and sea levels continue to rise, storms like these will increase in frequency and intensity, posing catastrophic consequences for small businesses.
Scientists agree that a drastic transition away from carbon based fossil fuels and towards clean energy is necessary to avoid extreme weather and other impacts of climate change. There may be no silver bullet to addressing climate change; however, scientists, economists and environmentalists all agree that putting a price on carbon emissions will have a resounding effect. In December 2014, the Department of Energy Resources (DOER) conducted a study that analyzed the implications of a carbon tax in Massachusetts. The study found that such a tax would not only be feasible and effective, but also would benefit the state’s overall economy by creating jobs and wealth. Since most of the fossil fuels consumed in Massachusetts come from out of state, an added fee on these fuels would stimulate the growth of the local clean energy industry, an industry that has already created more than 28,000 jobs in Massachusetts since 2010. According to the study, a carbon tax would lead to the creation of 4,000 to 10,000 more jobs by 2030.
But what exactly does this mean for small businesses?
At first, a carbon tax may simply sound like an added expense. However, if the added price was revenue neutral, all of the money it would raise would be returned to taxpayers through reductions in other taxes and rebates instead of being retained by the government. These reductions and rebates would be calculated proportionally, meaning that the largest polluters that pay the highest taxes would likely pay more than what they would receive in rebates. Likewise, the smallest polluters who pay the lowest taxes would likely pay less than what they would receive in rebates, potentially leading to profit. A study by the Massachusetts Department of Energy Resources found that more often than not, the latter would be the case. In this way, a carbon tax would disincentivize carbon-emitting activities at all levels, in turn incentivizing carbon-reducing measures, ultimately benefitting the environment.
Businesses would be able to reduce their carbon footprints, and therefore their tax expenses, through energy efficiency and conservation measures (such as the installation of doublepaned windows and insulation) as well as through the use of renewable energy. Moreover, most carbon-reducing measures also directly save businesses money in the long run. A carbon tax is therefore the most cost-effective way of reducing carbon dioxide emissions.
So far, 15 regions have proposed or implemented carbon taxes, one of the most significant and successful examples of which is British Columbia’s. Since it was put into effect in 2008, the tax has led to a 16 percent decrease in per-person fuel consumption. Moreover, the tax has benefitted B.C.’s economy. Over the past seven years, B.C. has experienced slightly higher economic growth than the rest of Canada has, while holding the lowest personal income tax rate in Canada and one of the lowest corporate tax rates in North America. B.C.’s carbon tax is thus viewed as a great success and has become a model for Massachusetts to imitate.
On April 13, the Climate Action Business Association worked with partner associations to bring B.C.’s Parliamentary Secretary for Energy Literacy and the Environment for the Minister of Environment, Mike Bernier, and other important business leaders to visit Boston and speak with business leaders, the Governor and leaders of the State Legislature about the success of B.C.’s carbon tax. Several business owners impacted by B.C.’s tax also came to discuss their support of it, demonstrating that a carbon tax can not only be beneficial to the environment but can be beneficial to the economy, businesses and individuals as well.
Evidence of the effectiveness of putting a price on carbon in Massachusetts is mounting, as is the number of people supporting it. There is currently legislation pending that favors the implementation of a revenue-neutral carbon tax, that if passed, could mark Massachusetts as a pioneer in addressing climate change in the United States. A carbon tax would put Massachusetts on the road toward more effective climate change policy and could further prove what B.C. has already illustrated: environmental impact can be reduced without sacrificing economic growth. By supporting a price on carbon in Massachusetts, small businesses can effectively fight climate change while simultaneously supporting the local economy, job creation and financial sustainability.
Marissa studies Environmental Analysis and Policy at Boston University and is an Intern at Climate Action Business Association for Spring 2015.