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Bringing the Voice of Small Business to Climate & Energy Policy

 A Look at Carbon Pricing

Most often “the business voice” represented in the media on U.S. energy policy is the perspective of the largest global corporations and the associations that represent them. The millions of small to mid-size businesses across the U.S. that play a crucial role in our national economy and in job creation also have valuable business insights into energy policies that can best serve our nation.

Small business leaders understand that climate change is real, that it poses serious risks to business today, and that robust federal policies are needed to address it. Small businesses are especially vulnerable to climate change because they lack the resources to endure extreme weather events.  A 2013 report from the American Sustainable Business Council (ASBC) and others found that approximately 30 percent of the small businesses affected by Hurricane Sandy never reopened as a direct result of the storm.

In June, 2014, ASBC released new small business polling results revealing that one in five small businesses has already been affected by climate change. Addressing the climate crisis will not just avert economic catastrophe, it can serve as a wellspring of innovation, job creation, and produce economic and international competitive benefits.

The question is, how do we do it? One strategy is a price on carbon.

The idea of pricing something higher to reduce consumption is not a new idea. Economists have backed the idea of a price on carbon as a highly effective way to cut greenhouse gas emissions.

Of course there are questions about how this price on carbon would be implemented. How would the price be set? What would the revenue be used for? Would it be revenue positive, bringing in funds that can be used for investments in clean energy, infrastructure, or other programs? Or would it be revenue neutral, with the funds being offset by cuts to other tax rates or rebated to consumers? Would it be progressive so as not to hurt lower income brackets?

ASBC members in Boston have been working to find answers these questions. Massachusetts businesses and state advocacy organizations have held public forums and commissioned a study on the economic and social implications of a price on carbon. The efforts resulted in proposed state legislation.

A common concern with a price on carbon is how small businesses would be affected. Interestingly, ASBC’s latest poll found that a plurality (39 percent) of businesses said they would actually prefer a 10 percent increase in energy costs rather than the unknown costs of climate change. A 2013 report by Regional Economic Models, Inc. on the economics of a price on carbon in Massachusetts found that traditional small business industries like apparel manufacturing, small business retail, and computer and electronic products would experience upwards of $163 million in growth by 2035 under a modest carbon price.

Still, we must ensure we help small businesses to transition to clean energy technologies. It’s also important that a price on carbon is not regressive. By returning some of the revenues to the lowest income earners, a price on carbon actually benefits small businesses that serve this segment of consumers. By reducing other employer taxes, a price on carbon can also spur job growth.

A U.S. climate and energy policy that is viable over the long term must include the experience of small business owners who recognize the danger of climate change, the opportunity for innovation, and the role of government in this debate. Now more than ever we need a price on carbon.

Richard Eidlin is the Policy Director and Co-founder of the American Sustainable Business Council.

Fran Teplitz is the Co-Chair of the American Sustainable Business Council Action Fund and is the Director of Policy & Social Investing at Green America.