Carbon tax profile for Tennessee (Michelle Primley Benton 2005)



1990
2005
% change 1990-2005
Fossil fuel CO2 emissions in millions of metric tons [1]
106
127
+21%
In millions of short tons [2]
117
141
+21%
Population in millions [3]
4.9
6.0
+23%
Per capita CO2 emissions in short tons
23.9
23.5
-2%

Per capita emissions in Tennessee in 2005 were somewhat higher than the U.S. average, which was 21.4 short tons per capita [4]. This was somewhat surprising because of Tennessee's position as one of the top hydroelectricity-generating states east of the Rocky Mountains, served by the Tallahassee and Cumberland river systems. While these river systems provide Tennessee with a great deal of hydroelectric potential, consumption is high in the state, ranking in the top 20 overall for both absolute and per capita energy consumption. Tennessee relies on limited coal reserves in Eastern Tennessee, nuclear reactors including the Watts Bar Nuclear Plant and a large-scale ethanol plant in addition to hydroelectric options for its energy needs [5].

While hydroelectricity is a comparatively large energy source in Tennessee, it accounts for only 8% of electricity production. Over half of Tennessee's electricity is produced using coal, most of which is transported from other states. Renewable energy sources such as wood waste and wind, used in lower per-capita emission states such as Oregon and Washington (12.75 and 15.1 short tons, respectively in 2005 [1] ), are minimal contributors to Tennessee's electricity production. More than 90% of the state's electricity production is overseen by the Tennessee Valley Authority (TVA), a federal agency instituted by Franklin Delano Roosevelt in 1933 and based in Knoxville, TN [5].

Industry accounts for the bulk of the state's energy demand, but the fact that over half of Tennessee's households rely on electricity as their main source of home heating may also contribute to Tennessee's spot in the top 20 for absolute and per capita energy consumption. One third of Tennessee household rely on natural gas as their primary home heating source. Therefore, though a carbon tax would hit industry the hardest, households would pay as well. Tennessee ranks number 40 in per capita personal income, with the average being $33,240 [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 $3.4 billion in 2005 (about $568 per person), assuming a 20% reduction in emissions.
  • For comparison purposes, in 2005
  • State B&O (business) tax generated about $2.4 billion
  • State sales tax generated about $6.09 billion
  • State fuel tax generated $845 million.

Tennessee does not collect a statewide property tax [6]. So a carbon tax of $30 per short ton of CO2 could (assuming a 20% reduction in emissions) have entirely replaced the state B&O tax, entirely replaced the state fuel tax or replaced 56% of the state sales tax.

Wary of losing business or being unable to attract corporations if a carbon tax is implemented, Tennessee's legislature has already taken steps to continue to appeal to green businesses. It has pledged to cover the future carbon tax costs for green companies pledging to make investments in Tennessee, beginning with two solar energy developments [7]. While this indicates that Tennessee is making steps toward addressing elements of climate change as they champion nuclear power and solar development, there is a large and vocal resistance to the idea of climate change among state leaders. Representative Marsha Blackburn stated that "the only climate change she believes in are the four seasons in Tennessee" [8]. However, with the pledge to cover future carbon tax costs and a stated desire to find clean energy and clean water, a carbon tax could shift Tennessee's reliance on pollutant-heavy coal-based energy.




[1] EPA, “State CO2 Emissions from fossil fuel combustion, 1990-2005”, linked from http://www.epa.gov/climatechange/emissions/state_energyco2inv.html.

[2] 1 metric tons is equivalent to 1.1023 short tons.

[3] 2005 population from the U.S. Census Bureau, http://www.census.gov/popest/datasets.html. (You need to download a CSV file and open it in Microsoft Excel; you might have an easier time finding 2005 population figures from Google or elsewhere.) 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] See state profiles from the EIA, http://tonto.eia.doe.gov/state/index.cfm.

[6] Tennessee Office of Financial Management, http://tennessee.gov/finance/act/cafr_fy05/cafr_fy05.pdf .

[7] Report from Carbon Offsets Daily, sourced from The Tennessean, http://www.carbonoffsetsdaily.com/usa/state-lures-firms-with-carbon-tax-credit-4896.htm

[8] WBIR Report, Knoxville, TN, http://www.wbir.com/news/national/story.aspx?storyid=106783&catid=16