Alaska’s climate action team suggests the state set up a carbon-pricing system

One option is a carbon tax, an unusual suggestion in a state that depends on oil production.

By Yereth Rosen - August 10, 2018
The trans-Alaska Pipeline runs near Toolik Lake in Alaska’s in the fall. Despite an economy and government dependent on oil, Alaska is considering a carbon tax. It would be the first U.S. state to enact one. (Kim Mincer / Bureau of Land Management)

Alaska, scientists have been saying for years, is on the front line of climate change. Now the climate leadership team appointed by Gov. Bill Walker is on the verge of recommending that the state join other governments in pricing carbon to encourage reductions in its emissions.

The Climate Action for Alaska Leadership Team, representing a cross-section of Alaskans, has drafted a 45-page action plan that includes a carbon-pricing system as a way for the state to address its rapidly warming climate.

Just what form the carbon pricing would take is yet unclear, but one suggested option in the draft plan is a carbon tax, a particularly bold suggestion in a state that is economically dependent on oil production.

If Alaska enacts a carbon tax, it would be the first U.S. state to do so, team member Chris Rose, executive director of the Renewable Energy Alaska Project, said at the group’s Aug. 2 meeting in Anchorage.

Several states, including large-population states like California and New York, do already have some sort of carbon-pricing system, and 13 more have pending carbon-pricing legislation, but a carbon tax would give Alaska special prominence, Rose said.

“This would be a teachable thing for Alaska to make that fundamental connection between what we’re doing and the cost of it.” He said. For now, people in Alaska and elsewhere are used to emitting carbon dioxide, an invisible pollutant, without paying anything — but there are steep costs to the public.

“We all have to start paying for it,” he said. “We can’t keep polluting for free.”

For Alaska, which is facing severe budget problems, a carbon tax would be an appropriate vehicle for generating state revenues, Rose and other team member said.

Alaska has no personal income tax and no statewide sales tax. Since the discovery of oil at Prudhoe Bay, the state government has been largely dependent on oil royalties, taxes and fees. However, those revenues are dwindling as oil production does. A carbon tax could provide the money for state efforts to address and mitigate climate change, said supporters of the idea.

“We need a revenue source,” said team member Mark Masteller of the University of Alaska.

A carbon fee and dividend system, an alternative to a simple carbon tax, could be particularly helpful to people in rural Alaska, including the state’s Arctic regions, who are already paying extremely high energy costs. When it comes to Alaska’s overall carbon emissions, “Rural Alaska contributes very little,” he said.

The draft action plan includes several recommendations for promoting renewable energy, both as a means to reduce greenhouse gas emissions and pollution and as a way to benefit Alaskans economically, especially in rural areas. Among those is establishment of a state-run “Green Bank” to finance renewable energy and energy efficiency. And it includes recommendations for economic diversification away from oil dependence, notably in fisheries, mariculture and other aspects of a “blue economy” based on the marine system. Another recommendation is promotion of carbon sequestration as a new economic activity — and the draft plan notes that one Alaska Native corporation has already been selling carbon offsets through California’s program.

However, the emphasis on fossil fuels’ negative impacts could be awkward, said team member Reggie Joule, a former state legislator and mayor of the Northwest Arctic Borough.

Much of the economy, including activity by Alaska Native corporations, is based on oil, and there are “economic benefits that reach so far,” he said.

Joule said he understands the need to transition away from fossil fuels, but he worries about a public perception that the recommendations are anti-development. For Alaska Natives, he said, the issue goes beyond oil:

“Part of the way it impacts us is to continue to be a ward of the government if we don’t develop (our) resources.”

Joule had another criticism, too: The recommendations do not explicitly refer to Alaska as being part of the Arctic — an omission that other members vowed to correct.

“At least in my opinion, there seems to be a magic about blending the Arctic and Alaska,” Joule said.

Couching Alaska’s climate problems and potential solutions as Arctic problems and solutions is a good way to gain consensus and helpful partners, he said. Among the potential partners is the U.S. Department of Defense, which has “investments and massive amounts of resources,” he said. “They may want to protect their investments.”

Climate team member Fran Ulmer, a former lieutenant governor who now chairs the U.S. Arctic Research Commission, agreed that it is important to tie climate change in Alaska to that of the entire Arctic.

She said she was speaking earlier in the year at Stanford about Arctic climate change — things like coastal erosion, the need to move villages and threats to food security.

“I remember one young student coming up to me afterwards and sayings, ‘so what’s Alaska doing about it?’ This is in California, the state where they have exercised leadership about trying to do something about carbon emissions and climate change. And here’s this student asking me a question that I didn’t have a very good answer for.”

The action plan is due to the governor in September.

Yereth Rosen is a 2018 Alicia Patterson Foundation fellow.