The very liberal town of Boulder, CO recently became the first U.S. city to pass a “carbon tax.” Starting next year, the average electric bill will go up $16 per year ($46 for business), raising close to $7 million over the next 5 years. As the Times put it,
The tax is to pay for the “climate action plan,” efforts to “increase energy efficiency in homes and buildings, switch to renewable energy and reduce vehicle miles traveled,” the city’s environmental affairs manager, Jonathan Koehn, said. The goal is to reduce the carbon levels to 7 percent less than those in 1990, which amounts to a 24 percent reduction from current levels.
As I’ve mentioned in earlier posts (about California’s actions), state and local leaders are stepping in to fill the gap on climate policy left by the U.S. federal government. Boulder’s move is important because the town is the first to use tax policy to directly affect the price of carbon and energy — a move that most economists, no matter what political stripe, greatly prefer to any other method. Boulder’s action is the most concrete yet by the signers of the U.S. Mayors’ Climate Protection Agreement, now up to 330 mayors from 320 in my last post on this (and only 250 when Green to Gold went to press just a few months ago). If you look at the map, it’s not just a blue state phenomenon. Given the breadth of involvement, it seems that more direct, local action to control greenhouse gas emissions will come, especially if the new Democratic Congress does not push a federal cap on carbon.
Businesses need to prepare for a patchwork of regulations and cost structures for carbon and energy around the world. It’s not pretty, but the direction is clear — it’s only going to get more expensive. Of course this means that the most efficient companies, or those moving away from fossil fuels, will have the eco-advantage.
