As long as fossil fuels remain artificially cheap and profitable, their rising use threatens civilization and human survival. Correcting this massive market failure from driving us beyond all tipping points requires that the price of carbon pollution account for its true social costs.
Carbon pricing is regarded by economists, investors and politicians around the world as the most sensible and effective systemic measure to address climate change.
A national carbon pricing measure, properly designed, will do four things: internalize the social cost of carbon, rapidly achieve large emission reductions, minimize economic disruption and recruit global participation.
An escalating revenue-neutral carbon fee and dividend (CFD) with border tax adjustments will achieve these outcomes. Its success derives from five distinct features:
1. Full dividend return: This feature will inject as much as $200 billion into the economy within 3 years. It protects family budgets from increasing energy costs by returning the revenue in the form of monthly checks to all households. It does not impose any rules on recipients making independent decisions about their energy usage. It will mobilize the power of aggregate demand for low-carbon products. It's an engine that builds a broad consumer financial stake at the retail level in lowering overall emissions.
2. Transparency: CFD is understandable to the public, will be completely accessible to public scrutiny and clear in its signals and benefits.
3. Bipartisan appeal: CFD already appeals to a broad range of views. It does not increase the size of government, require new bureaucracies or generate additional government revenues. The dividend protects lower income families and will recruit widespread, sustained approval and engagement. It will also facilitate the phasing out of all energy subsidies and some existing energy regulations.
4. Border tax adjustments: Import fees legally imposed on foreign products manufactured in nations without any emission fees, coupled with rebates to US exporters sending products to those nations, will create a fair competitive environment for US exporters and motivate other countries to adopt policies that harmonize global carbon pricing.
5. Predictability: A structured rising price on GHG emissions creates the context business planners require to optimize investment priorities and thrive in a carbon-constrained world. It also completely by-passes the volatility and complexity of cap-and-trade, not to mention subverting the rent-seeking behavior of Wall Street banks and traders. A CFD will not be prone to fraud.
Carbon fee and dividend is a democratic, market-based solution to the existential issue of our time. It is gaining support across the political spectrum.
But the best part is this: can you imagine the effect of mass participation in a climate solution and being able to see those effects growing in your own life, in your community and in your world? The psychological and social benefits of an equitable, transparent approach to engaging the nation to fight climate change are incalculable. And, we will finally be paying the true cost of fossil fuels.
The Proposal:
CCL is proposing a $15/ton fee on the CO2 content of fossil fuels imposed at their point of entry into the economy (refinery, wellhead, mine), rising $10/t/y, with all proceeds (less administrative costs) rebated to U.S. households, plus border tax adjustments to level the playing field between nations.
Who is Proposing:
Citizens' Climate Lobby (CCL) is a 7-year old, nonprofit, nonpartisan, volunteer organization focused exclusively on passing a revenue-neutral carbon fee and dividend (CFD).
The June, 2014 annual meeting in Washington drew over 600 volunteers who met with 508 Congressional offices over a 3-day period, discussing new economic modeling that shows a strong stimulus effect of a national CFD when 100% of the revenue is returned to households.
CCL is growing fast. Support has grown to over 6,000 members in 188 chapters (+ 99 more in formation) covering 329 Congressional districts in 48 states and Canada (June, 2014). CCL aims to have members in all 435 Congressional districts by the end of 2014. New groups are starting in 11 other countries.
A recent first-ever national study, conducted by Regional Economic Modeling, Inc. on the economic effects of a carbon fee and dividend indicates the following:
Carbon tax revenues, collected from about 3000 entities nationally, will amount to over $300 billion in the next 5 years, accumulating to more that $2T by 2030:
Those revenues will be returned on an equal basis to all households. Consumers receiving the dividend will use some of it to cover the increased costs of energy that are passed on from the producers. As the fee rises year by year, the dividend will be directed to reduce energy use. That’s the only way consumers can come out ahead.
The stimulative effect of the aggregate spending will create over 2 million jobs
over baseline projections by 2030:
The primary beneficiaries of that job creation will be in the two lower income quintiles because of a shift from the capital-intensive energy industry to the more labor-intensive renewable energy industries:
When dividends rise far enough (within 5 years), citizens will be able to afford larger energy-related expenditures such as home insulation, solar installations, fuel-efficient or zero-emission vehicles and other energy efficient products, spurring massive new investment in efficient technologies.
The fee and dividend will be an engine driving us toward a low-carbon economy. The instant a CFD passes the US congress, Wall Street and international markets will respond. Other nations will be induced to follow our lead if they expect their products to compete with ours. The total effect of broad consumer interest in low-carbon products and energy efficiencies as well as business innovation to reduce energy overhead will drive emissions down by more than 40% below current levels by 2030 and by 50% by 2035.
Finally, emission reduction will have an effect on mortality. Lives will be saved:
Although there are a score of other nations implementing some form of carbon-pricing, the only comparable
measure is in British Columbia, where instead of the dividend, revenues are used to reduce other taxes. Yet the effects have been
beneficial as predicted. It is stimulating the economy, creating jobs and reducing emissions.
Further positive effects of a rising carbon fee and dividend will be its modest effect on income inequality; it will put the brakes on the environmental injustice in low income communities that have been disproportionately effected by the fossil-fuel economy. It will also improve the status of water resources by reducing the vast amounts currently used for coal-mining and fracking. And, consider also that the carbon fee and dividend will reduce resource-based conflict.
If becoming more active for a national CFD appeals to you, find a CCL chapter near you; or better yet, create one of your own.