Carbon tax profile for South Dakota (Ranae DeSouza, with edits by Yoram Bauman)



1990
2005
% change 1990-2005
Fossil fuel CO2 emissions in millions of metric tons[1]
11.9
13.2
+11%
In millions of short tons [2]
13.1
14.5
+11%
Population in millions [3]
0.73
0.78
+6.8%
Per capita CO2 emissions in short tons
17.9
18.6
+4.3%

Per capita emissions in South Dakota in 2005 were lower than the U.S. average, which was 21.4 short tons per capita.[4] This was probably because one-half of overall electricity used in South Dakota is produced by hydropower and because 20% of South Dakotans use clean-burning liquefied petroleum gas as the primary means of heating their homes.[5]

South Dakota has much potential to substitute clean energy sources for CO2-emitting fuels and mitigate the growth rate of its future CO2 emissions in coming years. This is because the state government offers property tax incentives to developers who use land to generate renewable energy and because South Dakota has a high potential to generate a substantial amount of renewable energy (such as wind power on flat open plains, hydroelectric power on the Missouri River, ethanol-produced power on northeastern agricultural land, and geothermal power in the southcentral region).[6]

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 $349 million in 2005 (about $447 per person), assuming a 20% reduction in emissions.

For comparison purposes, in 2005:

- The state portion of sales and use tax was about $543 million.
- The state gas tax ($0.22 per gallon) brought in $128 million and the 3% vehicle excise tax brought in $56 million.
- The state portion of total tax was about $953 million.[7]
- The state portion of individual income tax was $0 (South Dakota levies no individual income tax).[8]
- In 2006 South Dakota passed an initiative called Measure 2 that increased cigarette taxes by $1 per pack, with some funding going to the property tax reduction fund.
- South Dakota has a Property Tax Reduction Fund (here's the legal language; the fund is financed at least in part by lottery proceeds) that are used to reduce local property taxes. The state does not appear to have a state property tax. In 2005 the Property Tax Reduction Fund provided about $113 million [6] to reduce local property taxes by 30%.

A carbon tax of $30 per short ton of CO2 (assuming a 20% reduction in emissions) could have replaced nearly two-thirds (62%) of the state sales and use tax or more than tripled the state property tax reduction fund revenue and could further anchor South Dakota's commitment to not levy a state individual income tax (South Dakota is one of just six US states that does not levy an individual income tax). A carbon tax of $30 per short ton of CO2 (assuming a 20% reduction in emissions) would represent a 36.6% increase in total tax revenue for South Dakota if other taxes weren't cut.

A CO2 emissions tax could also indirectly increase revenue for the state by increasing demand for carbon-fuel substitutes (such as wind power) that South Dakota has great potential to produce and export. South Dakota's potential wind-generated electricity represents 269% of the state's current electricity consumption, so the state could export surplus electricity.[9] A CO2 emissions tax in other states would encourage other states to purchase more of this clean-energy from South Dakota.
carbon emissions

  1. ^ EPA, “State CO2 Emissions from fossil fuel combustion, 1990-2005”, linked from http://www.epa.gov/climatechange/emissions/state_energyco2inv.html.
  2. ^ Weight Measure Conversion, http://www.easysurf.cc/cnver3.htm
  3. ^ 2005 population from the U.S. Census Bureau, http://www.census.gov/popest/datasets.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 tons of CO2 from EPA, http://www.epa.gov/climatechange/emissions/usgginventory.html.
  5. ^ EIA South Dakota state profile http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=SD and
    Wikipedia Liquefied petroleum gas, http://en.wikipedia.org/wiki/Liquefied_petroleum_gas
  6. ^ EIA South Dakota state profile http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=SD and
    Wikipedia Liquefied petroleum gas, http://en.wikipedia.org/wiki/Liquefied_petroleum_gas
  7. ^ South Dakota Budget in Brief Fiscal Year 2005, http://www.state.sd.us/bfm/budget/bib05/Budget_in_Brief.pdf, linked from http://www.state.sd.us/bfm/budget.htm.
  8. ^ The Tax Foundation, http://www.taxfoundation.org/research/topic/58.html
  9. ^ Running on Wind, http://harvardmagazine.com/2008/03/running-on-wind.html