News

Detailed carbon tax report shows potential for significant emissions reductions in Oregon
Author: Christina Williams
Posted: December 8, 2014

The Northwest Economic Research Center (NERC) at Portland State University reported the results of an eight-month study commissioned by the Oregon Legislature that finds a statewide carbon tax policy that redirects tax revenue back to the Oregon economy would have little to no impact on employment and economic output. 

The study modeled a range of policy options. Among its findings is that a pricing rate of $60 per ton of carbon emissions would raise more than $2.3 billion in revenue for Oregon and have a significant impact on emissions reductions by reducing overall demand and creating incentives for behavioral change. Even at a lower rate of $30 per ton of carbon emissions, Oregon emissions would fall significantly below 1990 levels—allowing the state to reach its ambitious emissions reduction goals by 2020. An analysis of 70 specific industries found only minimal impacts resulting from such a carbon pricing policy, which could be offset through other tax reductions. Similarly, effects on household income would be small, with varying options to offset impacts through existing tax and public assistance programs. 

The study, commissioned by the Legislature during the 2013 session through Senate Bill 306, is the most thorough analysis of a state-level carbon tax in the U.S. and includes detailed data about potential impacts and benefits of carbon pricing on specific regions and industries throughout Oregon. NERC worked with two PSU physicists, Andrew Rice and Christopher Butenhoff, to develop a finely tuned emissions model to accurately portray the benefits to Oregon resulting from reduced carbon emissions.

“This report is the result of a much deeper dive on this concept of a carbon tax and revenue repatriation and expenditure for Oregon,” said Tom Potiowsky, director of NERC and chair of PSU’s Department of Economics. “What we’ve continued to show is that putting a price on carbon will definitely reduce emissions and that a carefully crafted policy can achieve those reductions while ensuring that the economic impacts are minimal, or even slightly positive. Oregon could create a powerful incentive for behavior change and becoming a leading economic force for developing solutions for a low-carbon world.” 

NERC’s research follows and improves upon its March 2013 report, “Carbon Tax and Shift: How to Make It Work for Oregon’s Economy.” That report, funded by the Energy Foundation and Portland State University’s Institute for Sustainable Solutions, was the first to highlight the potential revenue and emissions reductions benefits of a carbon tax for Oregon and became a model for many other states exploring carbon pricing policy. 

Under the leadership of Potiowsky and with the expertise of Assistant Director Jenny Liu, an environmental and transportation economist, and Senior Economist Jeff Renfro, NERC has emerged as a leading center of research on the economics of carbon pricing. 

The full report to the Oregon Legislative Revenue Office is available on the NERC website: www.pdx.edu/nerc/projects