Click here to apply

Carbon tax is bad economic and public policy

By Leslie Anderson

The General Assembly in the State of Connecticut has proposed a “carbon tax” on energy which would collect more than $500 million in new taxes from homeowners and businesses in just the first year that the law would take effect. The proposed legislation (Raised Bill 7247) is now being considered by the General Assembly’s Environment Committee.

There are several reasons this idea is bad public policy and does not make good economic sense – for those who use propane, and all energy consumers as well.

This new tax, being labeled a carbon tax on fossil fuels, would be applied to most forms of energy, including gasoline, diesel fuel, heating oil, natural gas, electricity – and propane. Limited exemptions would apply to hydroelectric or nuclear-generated electricity as well as renewable biomass or waste vegetable oil. While we certainly understand the desire to promote the use of environmentally friendly fuels, it’s important to also understand the prominent role that propane plays in that ecological framework.

Most people don’t realize that propane has been designated an EPA certified “clean fuel.” That’s because propane is the cleanest burning fossil fuel. In fact, propane is actually a waste product that is left over when natural gas is collected and refined for distribution and use. If it were not used as an energy source for homes and businesses, most propane would be burned off at the refinery or processing plant.

Therefore, using propane to heat your home or even power an engine reduces greenhouse gas emissions that would otherwise be produced if propane was not used as a fuel source. In many ways, propane is the ultimate waste product made into a valuable energy source that is good for our environment.
If the goal is to increase the use of efficient energy sources which reduce our carbon footprint on the planet in a cost effective manner, then we should be finding ways to promote the use of propane, not penalize it.

From an economic standpoint, this new tax would cost the citizens of Connecticut approximately $10 million dollars per year. According to a July 13, 2016 article in the Hartford Courant (“Report: Connecticut Energy Costs Are Highest In Nation”), State residents spend an average of $410 per month on energy, the highest in the United States. Adding a carbon tax on top of that would add approximately $25 per month to that expense which puts the average energy cost for CT citizens at $100 per week.

A carbon tax would have the greatest negative impact on those who can least afford it, such as those with limited or fixed incomes. In fact, it could accelerate the migration of citizens to other lower cost states, something Connecticut is already working hard to try to avoid.

Taxing energy that is essential to keep our homes warm, our businesses running, and our vehicles on the road, is bad economic and public policy. Instead of raising taxes, the Legislature should support the use of energy efficient fuels like propane and promote the use of higher efficiency appliances to reduce CO2 and help the environment. The average consumption of delivered fuels (including propane) has decreased by more than 40% over the last 15 years. We are on the right track – and we need to keep that momentum going with a continued focus on incentives for energy efficient appliances and cleaner burning fuels.

Propane consumed in the United States is produced in North America. It is a major contributor to the energy security of the Unites States and protects consumers from uncertain energy supplies outside of our borders. Dozens of public entities around the country, including school districts and police departments, have converted their on-road fleets to propane because it is economical and beneficial to the environment.

But most importantly, taxing the energy we need to live and work is a dangerous idea, and will cause significant economic damage to those who rely on it as an efficient, economical fuel.

Instead, let’s focus on promoting the energy and efficiency we need to sustain long-term economic and environmental viability.

Leslie Anderson is president of the Propane Gas Association of New England