Using carbon tax revenues to help attain climate goals: Insights for Washington State from existing programs

This paper examines how best to use revenues from a carbon tax to achieve both climate and non-climate goals, identifying pitfalls and strategies to avoid them. As many governments around the world consider carbon taxes (and other forms of carbon pricing), a common question is what to do with the revenue they generate. A growing number of jurisdictions are using at least some revenue to enhance climate change mitigation efforts. This paper explores different options for using carbon tax revenues to help achieve climate goals. The analysis focuses on the State of Washington, where several bills pending before the State Legislature would establish some form of carbon tax, with differing indications for how revenues should be spent.