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Unsustainable model: Carbon tax would make state less competitive for businesses

An environmental advocacy group is proposing a carbon tax in New York to generate revenue to invest in renewable energy.

NY Renews is a coalition of organizations committed to reducing threats to the planet resulting from climate change. Its members include Syracuse United Neighbors and CNY Solidarity Climate Justice.

Coalition members referenced a study conducted by the Political Economy Research Institute at the University of Massachusetts at Amherst. It reports that New York must invest between $4 billion and $5.5 billion per year in clean energy initiatives to reach its goal of obtaining 50 percent of the state’s power from renewable sources by 2030, as outlined in the Clean Energy Standard.

The study says this revenue could be derived from taxing climate pollution. This would reportedly generate between 145,000 and 160,000 jobs annually in the clean energy sector in the first decade.

“The authors propose funding the necessary increases in state renewable energy investment with a polluter fee levied per ton of greenhouse gas emissions, rising from $35/ton in 2021 to $75/ton in 2030, which would generate an average of $7.1 billion annually. The study assumes that between a quarter and a half of the polluter fee revenue will be rebated to households,” according to a news release issued Tuesday by NY Renews. “Revenue from a polluter fee will also provide the funding necessary to support workers transitioning out of the fossil fuel industry and into the new energy economy. The study concludes that this transformative clean energy program can be accomplished at little to no cost to consumers, because the average cost of delivering a given supply of electricity from clean renewable sources will be roughly equal to, if not cheaper than, virtually all fossil-fuel based technologies.”

NY Renews cited a New York State Energy Research and Development Authority announcement made last month that about 150,000 clean energy jobs now exist in the state. In calling for legislation imposing a carbon tax, the coalition believes that investing in clean energy will provide a significant boost to the economy.

The problem with this mindset is that it doesn’t take New York’s business climate fully into account. The myriad of taxes and regulations on all levels of government make this state one of the most inhospitable in which to set up shop.

Renewable energy companies already receive federal, state and county subsidies. Suggesting that New York legislators need to wrench another $7 billion from the free market so these firms can create hundreds of thousands of new jobs highlights a weak point.

In order to sustain these jobs permanently, these companies must be able to sustain themselves. And after decades of relying on taxes to operate, that’s still not the case.

For the concept of a carbon tax to work effectively, it would need to be implemented nationwide. Then all companies in the United States would be equally subject to the tax.

Carrying this idea out state by state, however, is risky. New York would become even less competitive in attracting and retaining businesses than it is now. Other states that chose not to pass such legislation would lure these firms away.

An industry relying so heavily on government subsidies will wither once the source of its revenue dries up. If companies leave New York en masse as a result of a carbon tax, where will clean energy firms get their taxes?

We recognize the need to take climate change seriously, and we hope clean energy companies can thrive in New York where it is most appropriate. But they must be able to pay for themselves like any other part of the private sector. Trying to build on economy on taxes rather than free trade is a wobbly structure waiting to collapse.