A proposal in the Massachusetts legislature would charge a carbon tax on transportation and heating fuel to fund “green dividends” and local climate projects.
Massachusetts climate and justice advocates are endorsing new legislation they say would create more than half a billion dollars in annual revenue for climate action while protecting lower-income households from added energy costs.
Most of the money under the Green Future Act (HD 1972) would come from closing what some advocates call a “pollution fee loophole” — extending an existing carbon fee requirement for power plants to also include transportation and heating fuels, which account for 74% of the state’s emissions.
The change would generate between $500 million and $750 million per year, say supporters of the proposal. The money would be split between direct payments to lower-income households, a fund to assist displaced fossil fuel workers, and awards to cities and towns for projects that would reduce carbon emissions, either directly or indirectly.
“It’s pretty comprehensive in terms of not only trying to drive the policy change but also putting a revenue source behind it,” said the bill’s sponsor, state Rep. William Driscoll Jr. “It helps to lay out the path forward to how we’re going to decarbonize.”
Massachusetts is already in the midst of an intensive conversation about the state’s climate future. In December, Gov. Charlie Baker’s administration released its decarbonization roadmap, a strategic document laying out broad steps the state needs to take to achieve its goal of going carbon-neutral by 2050. The governor and the legislature are also deep in discussions about how to make a comprehensive climate bill acceptable to all parties.
Against this background, Driscoll’s bill attempts to offer a concrete vision for how to fund the state’s climate priorities and goals.
The bill is an elaboration on previously proposed carbon pricing legislation. Earlier bills called for placing an additional fee on all fossil fuel use in the state, but offered few details about what that carbon price would look like or how the revenue would be invested. The new proposal, on the other hand, lays out more detailed guidelines for how funds should be used and how the program would be designed and administered.
“It really provides a wonderful, thoughtful framework to not only reduce emissions but to increase economic activity,” said Jen Benson, president of the Alliance for Business Leadership and a former Massachusetts state representative who put forth her own carbon pricing bills during her time in the legislature. “It’s going to be a plus for the Massachusetts economy.”
Today, the state participates in the Regional Greenhouse Gas Initiative, which requires power plants to pay for every ton of carbon dioxide they produce. There is not any similar assessment for transportation or heating fuels.
The Green Future Act would require the state to close that gap by charging the transportation and heating fuel sectors for their emissions as well.
Massachusetts is already part of a regional collaboration of 12 states and Washington, D.C. that is developing a market-based system to put a price on transportation emissions. The bill would require the state to create a fee for transportation fuels even if the current initiative does not come to fruition.
The legislation also calls for a new green bonding program, which would allow, though not require, legislators to authorize up to $500 million per year for projects related to the state’s climate goals.
The bill lays out a system for spending the money in a way that aims to prioritize equity for often marginalized groups, including low-income and non-white populations. To promote this goal, they reached out to several organizations that do environmental justice work and asked them to share their concerns about the possible pitfalls of the legislation.
“I want there always to be the centering of Black and Brown voices, the ones that are closest to the pain, to ensure that this is something equitably and actually meeting the needs of the people instead of just assuming what would be the best thing for them,” said Tanisha Arena, executive director of Arise for Social Justice in Springfield, one of the organizations consulted during the process.
The bill proposes a system of “green dividends,” direct cash payments made to households with income in the bottom 40% to help them deal with any short-term costs incurred by the transition into the new system.
Much of the remaining money would be awarded each year to cities and towns that elect to participate and form a local climate crisis council to oversee the use of the money. The legislation calls for these councils to include members that reflect the socioeconomic, racial, age, and gender demographics of the municipality. Neighborhoods with high percentages of residents who are low-income, non-white, or have limited proficiency in English would need to be represented on the councils.
The sum each town receives would be determined by a formula that takes population and equity into account. Environmental justice communities would receive roughly 60% of the total funds. Lawrence, Brockton, and Quincy, smaller cities with high environmental justice populations, would receive around $3 million annually. Boston could see $23 million per year.
Municipalities would be given wide latitude in deciding what projects to undertake. The bill specifically mentions possibilities such as energy efficiency investments, electric vehicle charging infrastructure, and community microgrids, but communities can pursue any initiatives that reduce greenhouse gas emissions or help the community adapt to climate change.
“It’s not prescribing certain amounts to specific programs,” said Tim Cronin, Massachusetts state director for Climate XChange, one of the organizations involved in drafting and advocating for the bill. “It creates a broad framework for how the money can be spent to achieve these goals.”
Many cities and towns are already creating ambitious climate change plans, said Cameron Peterson, director of clean energy for the Metropolitan Area Planning Council, a regional planning agency that serves the greater Boston area. The bill’s approach to funding individual municipalities would provide a much needed influx of money for these efforts, she said.
“They are really taking action on this, but the funding that exists is really insufficient to meet the need and demand that’s out there,” she said.
In addition to helping reach the state’s decarbonization goals, these funds would be expected to boost the economy and create as many as 80,000 new jobs by 2030, according to supporters. The legislation also calls for the creation of a green workforce fund and commission that would be tasked with helping fossil fuel workers find training and employment opportunities during the transition to a clean energy economy. Part of the fund would also provide temporary financial assistance to affected workers.
No action had yet been taken on the bill. There has been growing appetite for carbon pricing legislation in recent years, but there is also the possibility that the legislature will pass the climate bill currently under negotiation with the administration then feel they’ve already addressed the climate change problem, said Benson, the former state representative. Passing the Green Future Act will require supporters to make a clear and convincing case for what the bill can add to existing approaches, she said.
“The challenge for Rep. Driscoll and the coalition working on this is really going to be explaining how this already fits into what they’ve already done but also enhances those efforts,” Benson said.