Policy Models

Revenue Positive pricing schemes accrue new revenue for the state, which can be reinvested in renewable energy deployment or distributed in other state programs and funds.

• Legislative examples of this model include: Hawaii S.B.1463, Montana H.B.193, New Mexico S.B.393, and Rhode Island H.5869. 

Revenue Neutral pricing schemes don’t accrue new revenue, instead they offer rebates back to consumers directly or by replacing other taxes whose revenue stream can be covered by a carbon price.

• Legislative examples of this model include: Connecticut H.B.6451, and Vermont H.463. 

Cap-and-trade systems set a cap on allowable GHG emissions and distribute limited emission permits that can be purchased and traded amongst emitters. This system uses market forces to set a price on GHGs.

• An example is the Regional Greenhouse Gas Initiative, a cooperative effort among several east-coast states to cap and reduce CO₂ emissions from the power sector.

Cap-and-Invest. An iteration of cap-and-trade, this model takes the process a step forward by allocating the funds generated by the sale of permits to certain programs, such as sustainable infrastructure, retrofits, and other efforts to reduce GHG emissions.

• Washington’s S.B.5126 (2021) is an example of this model.

Study commissions are created to better understand the policy impacts of a carbon price within a state. Commissions are usually composed of private, public, and academic representatives to carry out research, providing recommendations to the state legislature and executive on policy paths for pricing carbon.

• Examples of this include: Maine L.D.434 (2019), New Hampshire S.B.75 (2019), and California S.B.43 (2019).