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There is one thing stronger than all the armies in the world, and that is an idea whose time has come. According to Joseph Stiglitz, the world-renowned global economist and Columbia University professor, putting a price on carbon is a no-brainer. “I believe that over the long run we will have to have a carbon tax, the world will come around to this,” says Stiglitz.

Carbon Fee and Dividend. Its Time Has Come

Fee and Dividend, It's Time to Put a Price on Carbon

The World Bank recognizes the urgency of pricing carbon and supports recent attention on carbon coming from around the world:

  • Carbon pricing is gaining attention as a way to address climate change. About 40 countries and more than 20 cities, states and provinces use carbon pricing mechanisms such as emissions trading systems and carbon taxes.
  • A price on carbon helps shift the burden for damage from greenhouse gas emissions back to those who are responsible for it and who can reduce emissions.
  • The private sector has been increasingly outspoken in its support for consistent carbon pricing. and investments

The choice of instrument for putting a price on carbon will vary widely. There are two main types of carbon pricing: Emissions Trading Systems and Carbon Taxes. The choice of mechanism depends on the political and economic circumstances of each jurisdiction: country, province, state, city.

The REMI Study

A recent study by the Regional Economic Models Inc. (commissioned by Citizens’ Climate Education Corporation and Citizens’ Climate Lobby) revealed a convincing picture of The Economic, Climate, Fiscal, Power and Demographic Impact of a National Fee & Dividend Carbon Tax.

The study examined a tax on the carbon-dioxide content of fossil fuels. The tax would start at $10 per ton, increasing at $10 per ton each year. Revenue from the tax would be returned to households in equal shares as direct payments. Under this approach, the REMI study found that recycling the revenue back into the economy would add 2.1 million jobs over ten years. Improvements in air quality would save 13,000 lives a year. Emissions would decline by 33 percent.

What this study shows is that by giving the revenue back to the people, a carbon tax will actually stimulate the economy,” said Mark Reynolds, executive director of Citizens Climate Lobby, which commissioned the study. “The big knock on a carbon taxes has been that it would kill jobs. That assumption is now blown out of the water. (Source: CCL Press Release)

Carbon Fee and Dividend. Its Time Has Come,

Study Highlights: (Source: Summary of REMI Study)

  • CO2 emissions decline 33% after only 10 years, and 52% after 20 years relative to the baseline, $0/ton of CO2 case
  • National employment increases by 2.1 million jobs after 10 years, and 2.8 million after 20 years. This is more than a 1% increase in total US employment we don’t get without a carbon tax
  • 13,000 lives are saved annually after 10 years, with a cumulative 227,000 American lives saved over 20 years
  • $70-$85 billion increase in GDP from 2020 on, with a cumulative increase in national GDP due to F&D of $1.375 trillion
  • Size of monthly dividend for a family of 4 with two adults in 2025 = $288, and in 2035 = $396. Annually, this is $3,456 per family of 4 in 2025 ($1152 per capita–children get ½ dividend)
  • Electricity prices peak in 2026, then start to decrease. Real incomes increase by more than $500 per person in 2025. This increase accounts for cost of living increases
  • Maximum cost-of-living increase by 2035 is 1.7-2.5%, depending on region
  • Electricity generation from coal is phased-out by 2025
  • Biggest employment gains in healthcare, retail, and other services (excluding public administration). This is because people have more money in their pockets to spend, and these industries are labor-intensive, responding to increased consumer spending by creating more jobs
  • Regional Gross Product is steady or rising in 8 of 9 regions

TheGuardian reports that Citizens’ Climate Lobby advocates for the fee and dividend approach for two main reasons:

First, it’s probably the simplest carbon pricing option. The carbon fee would be implemented at the point of entry (well, mine, or port), and we already have a system in place to return the dividend to citizens during annual tax filings.

Second, it’s probably the most feasible option to implement, from a practical and political standpoint. The dividend offsets the cost of the carbon fee for most people, so there is minimal financial impact on the public. A carbon fee and dividend system has been implemented in British Columbia since 2008 with great success – the economy is doing well, emissions are down, and citizens have seen no net increase in taxes.

“There are also reports that interest in a carbon fee is ‘creeping up’ among US Senators…..a number of prominent politically conservative figures support the carbon fee and dividend system,” says TheGuardian.

For further information about the group, see the CCL FAQ, follow its local chapters on Facebook and the main group on Twitter, and/or attend its annual conference this weekend.

Finally, a carbon tax that makes sense. Carbon Fee & Dividend is truly an idea whose time has come. 

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  1. I’ll take anything at this point. However, in the long run carbon fees and dividends are essentially market strategies of which I do not like. There are layers to our current global paradigm that were there before climate change. I am referring to these: inequality, population, resource depletion, consumerism, government corruption, loss of arable land and water issues concerning shortages and contamination. It has been our current mode of operation that relies on self interest and competition that brought these issues about. And so it bothers me that we are putting so much faith in a mechanism that created our circumstances to begin with.

    My next paper is going to be on this very subject, I may have it by the end of the day actually.. For now let me just say that I’ll take the carbon tax/fee/dividend/trading/pricing whatever you want to call it; it’s all market based. But I’ll take it as something to do right now. We are already set deeply in the market life and so we are going to be living with it for a time, may as well use it for something beneficial while it last. But it won’t last long and neither will this idea marketing carbon. Ultimately we will simply have to forgo these old ways to survive and simply roll up our sleeves and go to work for free just cuz we wanna live, not because we want more money in our pockets.

  2. Danny – thanks for your response.

    Although I somewhat share your mistrust of the market mechanism to solve the carbon emissions issue, I support the F&D approach because it will influence behavior away from fossil fuels toward clean energy. That said, getting to a post-carbon world will not be easy. Oil is everywhere in our lives as you know.

    I would agree with you that our energy source is only part of the problem. Humanity will not survive at the current rate of resource exploitation and environmental abuse even with clean energy. We cannot save the planet but continuing business as usual. And then of course, we will add another 2 billion people by 2050. This, combined with the rise of a middle class in China and India striving to attain a Western consumer-focused lifestyle, does not augur well for the survival of our species.

  3. Yeah Rolly I don’t differ with you on all of what you said, maybe in degree, but that’s all. Yes, let’s do the carbon tax as we are not doing much else while we see emissions rising instead of lowering. I guess what my deal with this is that I feel we no longer have the time to do finger in the dike stuff. Yet, carbon taxing does not have to be that, but the proposals existing now are still way too weak. If we’re gonna do it, then 10-20 bucks a ton ain’t enough, more like 50 or a 100 would be more appropriate to the situation. Or set goals for 2020 or even sooner rather than the 2030 and 2050 stuff we hear. By then and at the rate of reductions we are setting, it would seem useless and more a temporary appeasing of the crowd than real action and intent to fix this. In the case of climate change, a good try is irrelevant because climate change don’t care about our good intentions.

    • Danny – I too would love to see a much more aggressive tonnage cost on carbon. In Sweden for example, the carbon fee if well over $100 per ton and yet the country is stable economically and thriving in the world markets. We in North America are taking way tool long to get around to tacking climate change – as you say, the finger in the dyke approach. I like this “In the case of climate change, a good try is irrelevant because climate change don’t care about our good intentions.”

      Thanks for the comments.


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