Even a Crazy-High Carbon Tax Would Help California Businesses

According to a new study out of California, taxing carbon emissions at a whopping $200 per ton would create more jobs in the state than business-as-usual.

The report was commissioned by Citizens Climate Lobby and carried out by Regional Economic Models, Inc. (REMI).  The latter used a model of the California economy they’ve developed and combined it with the Carbon Tax Analysis Model — an open-source, Microsoft Excel-based model of carbon emissions and tax revenues at the state level, built off data from the U.S. Energy Information Administration.  The resulting simulation looked at three different tax levels: $50 per ton of carbon emissions, $100 per ton, and $200 per ton.  All three started at $10 per ton in 2015, then rose $10 annually until they hit their maximum level: $50 in 2019, $100 in 2024, and $200 in 2034.

Lots of previous analyses have tried to model the economic cost of the damage climate change will impose, and $200 per ton of emissions is consistent with several of them.  But it’s also way higher than anything lawmakers here or elsewhere have considered.  The Canadian province of British Columbia, for example, has a carbon tax of $27.88 per ton. When the Obama Administration estimated the price of carbon, the mid-range of their numbers was around $40 per ton.

Yet not only did the $200 per ton tax create more jobs than the “do nothing” baseline in REMI’s simulation, it created more jobs than the lower taxes did.  Anywhere from 236,775 to 286,475 more jobs by 2035, to be specific.

Even a Crazy-High Carbon Tax Would Help California Businesses