Carbon tax profile for Iowa (Linda Li 2010; previous version byKelly Rider)

Iowa
1990
2007
% change 1990-2007
Fossil fuel CO2 emissions, in millions of metric tonnes[1]
64.0
85.2
+33%
Fossil fuel CO2 emissions, in millions of short tons[2]
70.5
93.9
+33%
Population, in millions[3]
2.8
3.0
+7%
Per capita CO2 emissions, in short tons
25.4
31.3
+23%

Per capita emissions in Iowa in 2007 were a great deal higher than the U.S. average, which was 21.0 short tons per capita.[4] While Iowa is the largest producer of ethanol in the U.S. as well as a leading state in terms of generating electricity using wind turbines, this state also heavily employs the usage of liquified petroleum gases (LPG) in agricultural and residential heating, which contributes to the disproportionately high usage of LPG in comparison to other states. While Iowa’s population is low, its industries are relatively energy intensive, which leads to high per-capita energy consumption and therefore higher per capita emissions. However, out of six states of similar population in 2005 (Arkansas, Kansas, Mississippi, Connecticut, Oregon and Oklahoma) only Oklahoma had higher emissions. Continued reliance on coal-fired power plants for most energy needs likely contributes to this difference. That said, Iowa has made a substantive effort to generate renewable fuel sources. In 1983, Iowa passed the Iowa Alternative Energy Production Law, requiring two utilities to generate 105 megawatts of electricity from renewable-energy sources. To that end, Iowa has become one of the leading producers of wind power with wind turbines in northwest and north-central Iowa. Electricity generated from wind has changed from less than 3 percent in 2004 to 6 percent in 2007. In addition, Iowa leads the nation in producing ethanol made from corn.[5]

A carbon tax of $30 per short ton of CO2 (about $0.30 per gallon of gasoline, or about $0.03 per kWh of coal-fired power) would have raised about $2.5 billion in 2007 (about $845 per person), assuming a 10% reduction in emissions.

The state income tax generated about $3.1 billion and the state sales and use tax generated about $2.7 billion.[6] A carbon tax of $30 per short ton of CO2 could (assuming a 10% reduction in emissions) have replaced the total of all other state tax collections or could have replaced 81% of the income tax.

As a $30 per short ton of CO2 tax would increase state revenues by more than one-third, in order to be politically palatable to the public, government officials would likely replace other revenue sources with this size of carbon tax. However, given Iowa's latest projected revenue decline of $414 million[7] , state officials may instead want to consider enacting a carbon tax in addition to current revenue sources in order to help solve their budget dilemma. For example, if Iowa taxed CO2 emissions at $5 per short ton, they would generate an additional $422.6 million at 10% reduced 2007 emission levels (about $141/person) and replace the majority of declining revenue. This is comparable to the amount generated by other taxes, such as the motor vehicle fuel tax, corporate income tax or use tax.
  1. ^ From EPA, “State CO2 Emissions from fossil fuel combustion, 1990-2007”, linked from here.
  2. ^ 1 metric tonne equals 1.1023 short tons.
  3. ^ 2007 population from the U.S. Census Bureau, http://www.census.gov/popest/states/NST-ann-est.html. 1990 population from U.S. Census Bureau, http://www.census.gov/popest/archives/1990s/ST-99-02.txt.
  4. ^ U.S. population of 295.6 million in 2005 from U.S. Census Bureau, http://www.census.gov/popest/states/NST-ann-est.html. U.S. carbon emissions of 6.317 billion short tons of CO2 from EPA, http://www.epa.gov/climatechange/emissions/usgginventory.html.
  5. ^ See state profile from the EIA, http://tonto.eia.doe.gov/state/index.cfm.
  6. ^ Iowa Fiscal Year 2007 tax figures come from the Iowa Department of Revenue 2007 Annual Report, http://www.iowa.gov/tax/educate/0778508add.pdf
  7. ^ Governor Culver’s Statement on Revenue Estimating Conference. October 7, 2009. http://www.governor.iowa.gov/index.php/press_releases/single/74/