Taxes alter economic behavior. Done right, they discourage “bads” and encourage “goods.” Hawaii does a middling job of getting this right.

Hawaii taxes tourists (who are “goods”) but not carbon emissions (which are “bads”). Hawaii penalizes labor (by income taxes, a “bad”) while allowing unfunded pension liabilities to grow (another “bad”).

How might Hawaii do better? By adding carbon taxes to the mix.

Consider the U.S. General Accounting Office’s $45 per ton (in 2018 dollars) estimate of the ongoing “social” cost of carbon. That’s the government’s best estimate (calculated before the Trump era, please know) of the ongoing unpaid cost of carbon damage to the planet.

Applying $45 to Hawaii’s 19 million tons of carbon emissions amounts to $855 million. What could that be used for?

AES Hawaii owns coal burning plant HEI HECO Campbell Industrial Park.
AES Hawaii own and operates this coal-burning plant at Campbell Industrial Park. Cory Lum/Civil Beat/2017

It could pay down Hawaii’s state debt, reduce unfunded state pension liabilities and/or fund climate adaption efforts required by — coincidentally — unpriced carbon to date.

Hawaii’s already (kind of) heading down this path in a non-fiscal way. It’s ending coal-fired power production, ramping up renewables and moving toward a carbon neutral economy by 2045.

That’s all good. But Hawaii could do better with more overt and transparent carbon pricing.

Hawaii also could be a first mover in applying carbon and/or pollution taxation to aviation and shipping. To date, both industries have done a incredible job hiding under the rug. Time to pull it away.

The average airline passenger seat mile generates about 0.10 kilograms of carbon emissions, according to the open-source Blue Sky model of aviation emissions. Blue Sky is the first to admit its methodology is rudimentary. But it does provide a number. That makes it a starting point.

A $45 per ton carbon levy on a maximum 2,500 miles of any flight to or from Hawaii (i.e. the nearest continental coast) would add roughly $12 to the average economy class ticket. That looks wearable.

Ocean shipping also has skillfully evaded the climate spotlight. It’s does this by claiming (among other things) its exotic cocktail of nasty emissions are just too complicated to easily translate into commodity carbon equivalents. In other words, they’re stalling. That game needs to stop.

Applying carbon pricing more comprehensively throughout the islands puts Hawaii at the forefront of carbon-based economic reform. It’s an appropriate role.

Hawaii and its Pacific island kin are among the most threatened places on Earth from climate change. Hawaiian Air and Matson are practically Pacific island flag carriers.

For a state surrounded by rising seas for which future projections look scary, it’s remarkable the case for locally comprehensive carbon pricing even need be made. It’s backyard/beachfront stuff!

Cities, states, regions and countries benefit from specialization. Silicon Valley attracts nerds. Nashville pulls in musicians. New York’s a magnet for Bernie Madoffs and Donald Trumps.

Hawaii — alongside tourism — can and should specialize in creating solar, wind, geothermal, biomass and ocean energy intellectual property, and funding it through pricing carbon.

In the last legislative session, House Bill 1991 called for a $10 carbon tax (wow!) in 2019, rising to $40 (woohoo!) by 2025. Even though both are well below the ‘real’ cost of carbon, they do represent a start.

But even with that low bar, the bill never passed chambers.

Should Hawaii create history with carbon pricing — or drown in inertia and lethargy? Anyone with children should think hard on this one.

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