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Members of environmental associations hold signs as they gather to demand improvements in climate change and energy models, outside the European Commission headquarters during the presentation of the 2030 Framework for Climate and Energy EU2030 in Brussels January 22, 2014. REUTERS/Yves Herman Members of environmental associations hold signs as they gather to demand improvements in climate change and energy models, outside the European Commission headquarters during the presentation of the 2030 Framework for Climate and Energy EU2030 in Brussels January 22, 2014. REUTERS/Yves Herman  

Study claims that a $200 per ton carbon tax would help the economy

Want to grow the economy while also helping the environment? Well, slap a $200 per metric ton tax on carbon dioxide emissions, according to a new study by an environmental group that claims such a policy would grow the economy and create jobs.

A report by the Citizens Climate Lobby claims that putting a $200 per metric ton tax on carbon dioxide emissions would create 300,000 jobs and $18 billion in growth for the state of California by 2035. Such a tax would also generate $16 billion more in household income and reduce carbon emissions by 75 percent from 1990 levels, the study says.

But in order to make a carbon tax not harm businesses and families, the study notes, it would need to be offset either through subsidies to households or through “across-the-board” tax cuts on income, sales, and corporation taxes.

“Detractors have said over and over that a carbon tax will tank the economy and kill jobs,” said Mark Reynolds, executive director of Citizens Climate Lobby. “This study blows that assumption out of the water. It shows that a carbon tax will actually create jobs and be good for the economy, provided the revenue from that tax is recycled back into the economy.”

The report may make a carbon tax sound rosy, but buried in the report are a couple of caveats. Here’s one: “Increasing the cost of energy with a carbon tax without offset… means reducing the competitiveness of Californian firms,” the study notes.

Another aspect of the carbon tax is that it would drive energy and manufacturing jobs out of the state that are internationally competitive, as companies who wouldn’t want to see their energy bills skyrocket would leave.

“Some of the ‘losers’… include petroleum and coal products (which includes petroleum refining), utilities, chemical manufacturing (energy-intensive and a feed stock to refining), oil and gas extraction, and primary metal manufacturing (for steel products such as pipelines),” the study notes. Having subsidies to households over tax cuts would add “computers and electronic products and  professional and technical services (which are big industries within California and competitive on the national and international market, with San Jose and Los Angeles competing with firms in Seoul, Shanghai, and London).”

Given the current flight of manufacturing and industry out of California, a carbon tax may not be the best option. Occidental Petroleum recently announced it was leaving the Golden State more than half a century after its founding in the state.

California’s business climate and strict environmental regulations have already been driving away oil and gas companies. The Orange County Register reports, “Not long ago, California was home to a host of top 10 energy firms – ARCO, Getty Oil, Union Oil, Oxy and Chevron; in 1970, oil firms constituted the five largest industrial companies in the state. Now, only Chevron, which has been reducing its headcount in Northern California and is clearly shifting its emphasis to Texas, will remain.”

Californians already suffer from some of the highest gas prices and energy costs in the country. The state also boasts the country’s highest gasoline tax, at 71.9 cents per gallon — this is on top of the 18.4 cents per gallon federal gas tax.

California has the highest poverty level in the country, at 23.8 percent, according to the LA Times. These families pay a disproportionate amount of their income energy and fuel especially.

The state already operates a cap-and-trade system, a low-carbon fuel standard and the legislature is debating whether or not to impose a carbon tax on gasoline.

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