Portland Tribune: City considers carbon tax
Author: Steve Law, Portland Tribune
Posted: August 22, 2013

Read the full article from the Portland Tribune here.

Mayor Charlie Hales may try to tap Portland’s green-minded voters to get more greenbacks for the city.

Hales teamed with the Oregon Environmental Council to poll Portland voters on a possible “carbon tax” on motor vehicle fuel, electricity and natural gas.

Portland voters were asked in the recent poll whether they’d support a 3 percent tax on their gas and electric bills and a 4.5 cent-per gallon tax on gasoline. That could raise up to $27 million a year for public transportation, improving sidewalks, reducing air pollution and energy efficiency programs.

Carbon taxes are designed to reduce use of gasoline, coal, natural gas and oil by making them more expensive, because burning such fossil fuels is a leading source of carbon dioxide emissions that cause global warming.

Environmentalists and economists view carbon taxes as the best available scheme to counter climate change, given lagging political support for a cap and trade system for carbon credits.

But the tax level being analyzed by the city might be more effective at raising extra money for city coffers than causing a noticeable shift in Portlanders’ use of fossil fuels.

“It likely wouldn’t have a large impact on consumption patterns,” says Tom Potiowsky, the former state economist who teaches at Portland State University.

Hales promised to look for new sources of revenue for street and sidewalk projects when he ran for mayor. His spokesman, Dana Haynes, says the results of the poll will help determine how hard the mayor pursues the idea.

“If the results come back a resounding ‘no,’ then he won’t go forward with something that doesn’t have a chance of passing. But if the results show support for a carbon tax, then he’ll start talking to the other elected officials in the building about it,” Haynes says, referring to Hales’ peers on the City Council.

Potiowsky suggested the tax at the level being discussed by the city might be a way to “test the waters” or introduce a new tax at an acceptable level, “rather than passing a carbon tax that would have a lot of teeth.”

The Northwest Economic Research Center at Portland State, directed by Potiowsky, published a study in March analyzing a prospective statewide carbon tax. His team calculated it would require a 27 cent-per gallon increase in gasoline prices, plus equivalent taxes on other fossil fuels to reduce current statewide greenhouse gas emissions 2 percent by 2015. A 55 cent-per gallon increase would lower emissions by an estimated 12.5 percent, PSU economists estimated. They calculated it would take a gas increase of about 94 cents a gallon to achieve the state goal of cutting greenhouse emissions to 10 percent below the 1990 level, by 2020. However, the state wouldn’t reach that goal until 2030, 10 years late.

The Oregon Environmental Council paid for the poll, Haynes says.

“There’s a national discussion going on about ways to reduce carbon emissions,” says Jana Gastellum, the OEC’s climate protection program director. “Economists agree the best way is to increase the cost of carbon.”

Polling was conducted by Fairbank, Maslin, Maullin, Metz & Associates. Pollsters asked voters to respond to a prospective ballot title, which is the measure description that would appear first on the ballot. Similar polls are routinely used to gauge support for statewide ballot measures.

Haynes says public hearings will be held on the idea if Hales decides to pursue it. No election date has been set.

State clean air fee

The idea of a carbon tax is gaining favor in Oregon since PSU’s study was released, and based on favorable early results of British Columbia’s carbon tax. The PSU study concluded that a state carbon tax would also help diversify the state’s revenue base, perhaps providing more money for public schools and other services.

A bill to create a statewide carbon tax, supported by the Oregon Environmental Council, failed in the 2013 legislative session. But lawmakers approved Senate Bill 306, which requires the state Legislative Revenue Office to prepare a report for legislative committees by December that evaluates how a “clean air fee” would be structured, how it would affect low-income residents, businesses and communities around the state, and its impact on jobs and greenhouse gas emissions.

It’s unclear if many Portlanders would drive less with a new 4.5 cent-per gallon tax on gasoline, or use significantly less electricity and gas if rates go up 3 percent. Such increases occur regularly due to market conditions.

For gas prices, consumers are “relatively insensitive to price increases,” Potiowsky says. However, sometimes when prices reach a certain high level, people are more open to changing their behavior, he says.

Reporter Jim Redden contributed to this story.