Column: Carbon cashback rebates for all residents, for years to come

Hawaii’s Legislature was justifiably proud of providing to all residents a rebate this year that benefits low-income families in particular. The amount of the rebate depends on income, with those earning less than $100,000 receiving $300, and those earning $100,000 or more receiving $100.

The Legislature will have the opportunity to do even more for Hawaii’s families in the upcoming session. The “carbon cashback” bill would provide a carbon rebate, or cashback, to all residents. The rebate would continue for at least a decade and increase annually. Perhaps more importantly, the bill would help transition Hawaii’s economy toward a 100% clean, renewable energy future.

After a two-year ramping up of the program, carbon cashback would provide a carbon rebate of $360 in 2026 to all residents, regardless of income. Adults would be entitled to a full share, and dependent children would be entitled to half a share. The rebate would increase annually, until it would be $480 in 2036.

The carbon cashback bill is silent on what would happen after 2036 because of the difficulty in making projections so far into the future. As 2036 approaches, the Legislature would have to determine the amounts of future carbon rebates.

The funding for the carbon rebates would be generated by a carbon tax levied on companies that import fossil fuels to Hawaii. The higher prices resulting from the tax would have the economic effect of reducing fossil fuel consumption. That would reduce greenhouse gas emissions, helping to control climate change.

According to a study on carbon pricing in Hawaii by the University of Hawaii Economic Research Organization (UHERO), most families would enjoy a net financial gain because their carbon rebate would more than offset higher prices resulting from the carbon tax. In other words, this bill would help low- and middle-income families deal with the harm caused by the current inflation.

Lower-income households spend less than higher-income households on energy-intensive goods and services, so they would contribute less to carbon tax revenues. Yet they would share equally in the carbon rebate. Therefore, as UHERO found, carbon cashback would be progressive.

The UHERO study determined that this rebate would increase the purchasing power of Hawaii’s lowest-income families by $900 each year (in 2012 dollars). The annual net gain would be about $500 for middle-income families, and Hawaii’s wealthiest households would break even.

Visitors would contribute to carbon tax revenues because of the goods and services they purchase while in Hawaii. Those tax revenues would be directly transferred to Hawaii’s households as part of the climate rebate.

The UHERO study determined that a program like carbon cashback would not weaken the economy.

Such programs have proven to be effective in Canada and elsewhere in reducing carbon emissions. If extended through 2045, carbon cashback would reduce Hawaii’s carbon emissions by 13%, which would be equivalent to taking 400,000 gasoline-powered cars off the road.

Hawaii has set a goal of net negative emissions by 2045, so other emissions reduction programs would be needed, and carbon cashback would work in concert with all of them.

Recent climate data show that we have only a few years to make the drastic changes needed to avoid a global climate catastrophe. Hawaii has been a leader in establishing green energy goals. The Legislature has the opportunity in the upcoming session to pass carbon cashback and the multiple bills needed to achieve those goals.

Joe Calavita is a member of Hawaii Environmental Change Agents; Ron Reilly is co-lead of the Hawaii Chapter of Citizens’ Climate Lobby (CCL); Bobbie Dee Best is a longtime environmental advocate. They, along with co-signers Helen Cox and Doug Hagan, represent CCL Hawaii and the Carbon Cashback Task Force.