DC may price carbon. Will the price be right?

DC Councilmember Mary Cheh has floated a proposal to price carbon and mandate that electricity in DC come from renewable sources. Environmentalists say the proposal is a good start, but its details are not bold enough to meet the District's climate and energy goals.

Climate change activists rallied on the steps of the DC Council building last week to call for aggressive action against the carbon pollution that causes climate change. Cheh, who chairs the Council's Transportation and Environment Committee, circulated a proposal last month that would mandate 100% renewable electricity in DC by 2050, institute a fee on carbon emissions, tie vehicle excise taxes to emissions, and put a carbon fee on motor fuels if Maryland or Virginia does as well.

Under Cheh's draft proposal, the revenue generated by the carbon fee would be split among several programs, including:

• The soon-to-be established Green Bank, which the DC Council voted to create last week and which will fund renewable energy, green jobs and other sustainability projects.
• Rebates for low- and middle-income residents to help offset the higher cost of dirty energy that would result from the carbon fee. The details on how the rebate would be allocated would be left to a commission appointed by the mayor and the Council.
• Tax incentives for renewable energy retrofits for commercial buildings.

At the rally on last week, carbon pricing advocates lauded Cheh for her carbon fee blueprint, but they also called for more aggressive efforts to reduce greenhouse gas pollution.

“Councilmember Cheh's proposal is headed in the right direction, but it has to be strengthened before a bill is introduced and passed,” said Camila Thorndike, the carbon pricing campaign director, at the rally on the steps of the John A. Wilson Building. “To meet Mayor Bowser's commitment to the Paris Climate Agreement’s emissions reduction targets and to [meet] her pledge to get DC to be carbon neutral by 2050, we need a much more robust price on carbon.”

Draft legislation from the coalition advocating for carbon pricing seeks a fee of $20 per ton of carbon in 2019, rising $10 a year until it reaches $150 in 2032. Cheh's outline is more modest: $10 per ton starting in 2020, increasing $5 a year and topping out at $100 per ton in 2038. The coalition proposes to rebate 75% of the money directly to residents. Cheh's preliminary proposal, with a lower carbon fee, would result in a smaller rebate and thus less of a market-based incentive for people and businesses to switch to clean energy.

The carbon pricing coalition has a detailed comparison of Cheh's early proposal and the coalition's draft legislation. That coalition – called Put a Price On It, DC – consists of more than 70 environmental, religious, business, labor, community, and social justice groups that have been working for more than two years on carbon pricing legislation.

Council Chairman Phil Mendelson introduced complementary legislation on May 1 that would require 100% of DC's electricity to come from renewable sources by 2050. That's a boost from current law, which requires 50% renewable energy by 2032.

Cheh's draft proposal includes the 100% renewable electricity requirement and takes several steps to strengthen it further, including requiring that Pepco procure 70% of its electricity from long-term power purchase agreements for renewable energy. Her proposal also requires that Renewable Energy Credits come from within the wholesale market where Pepco buys electricity, which would mean additional sources of clean energy (such as solar and wind farms) coming onto the market.

Cheh's staff has been convening weekly meetings for several months with carbon fee supporters and representatives from DC's business lobby, which has been skeptical of legislation to price carbon pollution. Cheh had initially indicated she would formally introduce a bill in early June, but has since said it could slip later into the summer.

The author is a member of the coalition advocating carbon pricing in DC.