© American Council for an Energy-Efficient Economy 529 14th Street NW, Suite 600, Washington, DC 20045 Phone: (202) 507-4000 • Twitter: @ACEEEDC Facebook.com/myACEEE • aceee.org © Efficiency Canada c/o Carleton University 1125 Colonel By Drive Ottawa, ON K1S 5B6 https://efficiencycanada.org STATE AND PROVINCIAL EFFORTS TO PUT A PRICE ON GREENHOUSE GAS EMISSIONS © ACEEE AND EFFICIENCY CANADA Contents About the Authors ..............................................................................................................................iii Acknowledgments ..............................................................................................................................iii Executive Summary ........................................................................................................................... iv Introduction .......................................................................................................................................... 1 Federal Carbon-Pricing Policy in Canada ............................................................................ 3 Current Carbon Taxes and Cap-and-Trade Programs in the United States and Canada ......... 5 Carbon Taxes ............................................................................................................................ 7 British Columbia ........................................................................................................ 7 Canadian Provinces and Territories with the Federal Carbon Tax .................. 11 Canadian Provinces/Territories with Provincial Carbon Taxes ...................... 16 Boulder, Colorado ................................................................................................... 17 Cap-and-Trade Programs ..................................................................................................... 19 Regional Greenhouse Gas Initiative ..................................................................... 19 California .................................................................................................................. 22 Quebec ...................................................................................................................... 25 Nova Scotia ............................................................................................................... 27 Pending Proposals ............................................................................................................................. 28 Transportation Climate Initiative ........................................................................................ 28 Hawaii...................................................................................................................................... 29 Massachusetts ......................................................................................................................... 29 Oregon ..................................................................................................................................... 30 Rhode Island ........................................................................................................................... 30 Washington ............................................................................................................................. 31 Other Proposals ...................................................................................................................... 32 i STATE AND PROVINCIAL EFFORTS TO PUT A PRICE ON GREENHOUSE GAS EMISSIONS © ACEEE AND EFFICIENCY CANADA Findings from Other Countries ....................................................................................................... 33 Implications for Energy Efficiency .................................................................................................. 34 Discussion ........................................................................................................................................... 36 Observations ........................................................................................................................... 37 Areas for Further Work ......................................................................................................... 38 Conclusions and Recommendations ............................................................................................... 40 References ........................................................................................................................................... 41 Appendix A. Details of Carbon Tax and Cap-and-Trade Programs .......................................... 55 ii STATE AND PROVINCIAL EFFORTS TO PUT A PRICE ON GREENHOUSE GAS EMISSIONS © ACEEE AND EFFICIENCY CANADA About the Authors Steven Nadel is ACEEE’s executive director. He previously served as ACEEE’s deputy director and director of ACEEE’s Utilities and Buildings programs. Prior to ACEEE, Steve worked for Massachusetts’s largest electric utility and largest environmental group and worked with an inner-city housing organization in Connecticut. He has worked in the energy efficiency field for more than 40 years and has over 200 publications. His current research interests include energy and climate change policy; strategies to decarbonize the buildings, transportation, and industrial sectors; utility-sector energy efficiency programs and policies; and appliance and equipment efficiency standards. Steve earned an MS in energy management from the New York Institute of Technology and an MA in environmental studies and a BA in government from Wesleyan University. James Gaede is Efficiency Canada’s senior research associate. Prior to joining Efficiency Canada James was a postdoctoral fellow at the University of Waterloo, where he conducted research on the social acceptability of grid-scale energy storage. James has a PhD in political science from Carleton University. Brendan Haley has been Efficiency Canada’s policy director since the organization’s launch in 2018. Brendan oversees research and advocacy efforts and led the development of Canada’s first provincial energy efficiency policy scorecard and database. His advocacy for energy efficiency in Nova Scotia while energy coordinator at the Ecology Action Centre led to the creation of Canada’s first energy efficiency utility. Brendan has a PhD in public policy from Carleton University, an MA in environmental studies from York University and a BSc in economics from Dalhousie University. Acknowledgments This report was made possible through the generous support of the Tilia Fund and internal ACEEE funds. Efficiency Canada acknowledges the generous support received from allies and funders, including the Jarislowsky Foundation, McConnell Foundation, Donner Canadian Foundation, Ivey Foundation, Trottier Family Foundation, and Borealis Foundation. The authors also gratefully acknowledge the external and internal reviewers who supported this report. Dallas Burtrow, Resources for the Future, and Dave Sawyer, Canadian Institute for Climate Choices, both served as external reviewers. External review and support do not imply affiliation or endorsement. Internal reviewers on this updated version of the report were Bryan Howard and Lauren Ross. Last, we thank Mariel Wolfson for developmental editing; Mary Robert Carter for managing the editorial process; Mary Rudy for copy editing; Roxanna Usher for proofreading; Kate Doughty for graphics; and Wendy Koch and Ben Somberg for their help in launching this paper. iii STATE AND PROVINCIAL EFFORTS TO PUT A PRICE ON GREENHOUSE GAS EMISSIONS © ACEEE AND EFFICIENCY CANADA Executive Summary KEY TAKEAWAYS • Efforts to put a price on greenhouse gas emissions are growing, with carbon prices now in effect in all Canadian provinces as well as 12 U.S. states. • Several North American carbon-pricing programs have been in effect for more than a decade. Evaluations show they have reduced energy use and emissions while also providing other benefits, including perhaps helping local economies (and certainly not appreciably harming them). • Energy efficiency plays an important role in several of these states and provinces, due in particular to carbon-price-funded programs that help reduce energy use and cushion the effect of a carbon price on energy costs. • While a price on carbon is an important strategy, to achieve long-term carbon-reduction goals, carbon pricing will need to be complemented by other approaches to reducing energy use and emissions. REPORT SUMMARY Efforts to put a price on greenhouse gas emissions are growing. Approaches include carbon taxes and cap-and-trade programs. Currently, carbon taxes are in effect in all of Canada (except Nova Scotia and Quebec) and Boulder, Colorado. Cap-and-trade programs are in effect in California, Quebec, Nova Scotia, and the 11 northeastern states that form the Regional Greenhouse Gas Initiative (RGGI). These states and provinces together comprise 37% of the U.S. and Canadian population, up from 31% two years ago. Several other states are now considering putting a price on emissions. The British Columbia carbon tax has been in place for more than a decade, and multiple evaluations have found that it is reducing energy use and greenhouse gas emissions without a serious impact on the province’s economy. Likewise, RGGI has been operational for over 10 years, and evaluators have found that it has reduced energy use and emissions while providing net positive benefits in the form of decreased emissions,