Climate change poses a threat to the safety and prosperity of America’s and the world’s citizens. Every major scientific academy agrees that global warming is real, is mostly caused by humans, and requires urgent action. The signs of climate change are all around us. For example, the volume of the summer Arctic sea ice has dropped about 70% in the past 30 years and global temperatures have set records for the past 3 years in a row. And while most world leaders and climate scientists agree that we should not let the world warm more than +2ºC, we are on track to exceed that around mid-century. There is a high level of scientific certainty that the main cause of global warming is the release of greenhouse gases from the burning of fossil fuels. Manmade CO2 accumulates in the atmosphere for hundreds to thousands of years and its warming and sea level impacts last even longer.
Sir Nicholas Stern said that fossil fuel companies’ ability to release greenhouse gases into the atmosphere for free “is the greatest market failure the world has ever seen.” While scientists have been calling for a reduction in fossil fuels usage for over 30 years, emissions have dramatically increased in that period. There have been some attempts to put carbon pricing policies and regulations in place, such as Cap and Trade schemes in Europe and California, but these policies have not led to significant emissions reductions.
Now, The Climate Leadership Council (“CLC”), a group of prominent conservative statesmen, are calling for the implementation of a Carbon Dividends Plan (“CDP”), which is also known as a Fee and Dividend policy. Under CDP, a steadily rising fee is levied on the CO2 content of fossil fuels and is paid by the fossil fuel companies at the mine, well, or port of entry. One-hundred percent of collected fees are equally distributed to every legal resident. To protect American businesses and encourage other countries to get on board, a border duty (tariff) will be put on products coming from countries without their own carbon pricing policy. The CLC calls for the Carbon Dividends Plan to replace other carbon regulations such as the Clean Power Plan. A study by Regional Economic Models Inc. (REMI) commissioned by Citizens Climate Lobby, concluded that a U.S. CDP policy would, over 20 years, create 2.8 million jobs, increase GDP by $1.4 trillion, while reducing CO2 emissions by over 50%.
The beauty of the carbon fee and dividend plan is that we know it would never be repealed. No politician would touch the dividend. And a fee would be far… Read more »
William: The problem with using the money for government purposes is that Republicans want to use it for corporate tax relief and Democrats want to use it for social problems.… Read more »
Dan, if half the money is rebated, plus all the growth, the public will be satisfied. Half the money distributed per capital covers 50%, so with some modest means testing… Read more »
William: Just like the Republicans don’t care what the Democrats want, climate change doesn’t care what the Republicans want. While there may be lesser policies that could get approved in… Read more »
Calling this a Carbon Dividend plan rather than a Carbon Tax is reasonable because if the government returns all the money, is it a tax? The fossil energy industry will likely… Read more »
I am in favor of virtually anything that would reduce emissions of greenhouse gases because these emissions threaten to disrupt the lives of our descendants. If this would pass Congress,… Read more »
Initially, at a low Carbon Dividend, there will be some move as the signal will be in place. The big movement will come in the later years when the Carbon… Read more »
Craig: As others have said, Cap and Trade works great theoretically but does not work well in reality. In Europe, the recession crashed the price for carbon allowances, for example.… Read more »
Dan, I definitely support the idea of establishing national and global carbon fees/taxes to encourage substitution to clean-energy alternatives as well as promote energy conservation. However, I doubt carbon taxes… Read more »
You are on the right track. But the central issue really is the development of ‘clean’ energy technologies that are cheaper than coal. With those solutions available, regulatory contrivances like… Read more »
Lewis: When you consider the incredible damage that burning fossil fuels does to human health, the environment, and climate, you come to the conclusion that they are one of the… Read more »
Henry: With CDP, the price starts at $40/ton but keeps going up every year until it reaches $100/ton and beyond. A $100/ton fee will have a much greater impact than… Read more »
I have heard the tax and dividend story many times. Here are my two questions: (1) who decides what the tax rate will be? and (2) who decides how proceeds… Read more »
Bill: To answer your questions: (1) the rate is determined a priori, in this case $40/ton and probably growing $10/ton every year. (2) 100% of the proceeds are distributed to… Read more »
Thanks for your response! Tax and dividend is very, very appealing in theory. I am still unsure about it’s impact in practice. Here’s why: (1) an a priori carbon tax would… Read more »
Bill: (1) the purpose of the carbon fee is not to reflect the cost of compliance, it is to reflect the cost of the damage caused by the emissions. In… Read more »
Okay…So tell me (specifically) what is so wrong about Cap and Trade? But, please don’t give me the example of Australia. They messed it up from the very beginning. Poor… Read more »
Bill: Briefly, here are some issues about Cap and Trade (C&T): 1. The fee varies with the economy and technical innovations and, therefore, the future level of the fee is… Read more »
Thanks again for your response! Having traded emissions credits (and used them in financings), I am quite familiar with the uncertainty of emissions prices, but we learned to deal with… Read more »
Bill: 1. I’m not talking about banking credits. The C&T fee is determined by how much higher the current emissions are vs. the cap and how hard it is to… Read more »
While we could go back and forth forever. this would be a waste of bytes. I applaud and commend you for a refreshingly civilized debate based on substance. If only… Read more »
Bill: I hope we get to the point where the world is debating C&T vs. F&D, rather than debating whether climate change is real or not!
This proposal sounds a lot like the bipartisan bill which Cantwell tried to push in 2009, and it is a disgrace that people outsmarted themselves by blocking it for all… Read more »
Paul: CDP is somewhat like the Cantwell bill, but the Cantwell bill diverted some of the revenues to other purposes. A plan that gives 100% of the money back to… Read more »
Kudos to Dan Miller for his intelligent responses to the questions and comments above. The difficulty is how to enact a CDP. There is simply no political path, no itch… Read more »
I enthusiastically support the carbon dividends plan (CDP) as recommended by the CLC subject to a wise and fair implementation. Exxon Mobil CEO Darren Woods has recently stated that he… Read more »