Carbon Fee & Dividend
Advantages Over Other Climate Solutions:
  • Allows the market, through a simple mechanism, to do most of the work of reducing carbon emissions, elimating the need for complex regulation. If Carbon Fee & Dividend were enacted, it could enable large amounts of existing environmental regulation and red tape to be repealed.

    Some skepticism has been expressed about regulation being repealed, but bear in mind that a lot of industry is very aware of how painful this regulation is for them, and they have a lot of very well-funded lobbyists representing them, so there is a very good chance that, one it is clear that this regulation is redundant and unnecessary, they will be able to get it repealed.

  • Since it eliminates the need for complex regulation, Carbon Fee and Dividend would provide a predictable environmental policy for the future, reducing regulatory uncertainty. Regulatory uncertainty is a huge problem for policymakers and industrialists, since it makes it hard for them to plan for the future.

  • Unlike a lot of environmental policies advocated by left-wing organizations, Carbon Fee and Dividend is narrowly focused on global warming. It does absolutely nothing other than solve the environmental problem. Absolutely no socialist agenda.

  • Since it's revenue neutral, does not grow the size of the public sector.



Endorsed By:



Nobel Laureate and Former Energy Secretary Steven Chu


Former Fed Chairs
Alan Greenspan & Paul Volcker


Former Fed Chair Ben Bernanke


Current Secretary of the Treasury and Former Fed Chair Janet Yellen
Link to video


Climate Scientist
James Hansen


Climate Scientist
Katharine HayHoe


Former Rep Francis Rooney R-FL


Andrew Yang
Democratic Presidential Candidate




Details

Impose a fee on carbon, and have the government return the money equally to everybody in the form of a monthly dividend immediately, before the politicians can get their grubby fingers on it.  Revenue neutral .
  • The carbon fee should be imposed at the wellhead, or when fuel is imported.

  • The dividend payments should be frequent, perhaps monthly, because poor people who really need the dividend to make ends meet in the face of higher energy costs often can't wait a year for the help.

  • The fee should also be imposed on gases released into the atmosphere as a side effect of production, and it shouldn't just be a simple fee on carbon, since some chemicals are more potent greenhouse gases.  So a severe fee should be imposed on methane that is leaked into the atmosphere without being burned in natural gas drilling, since methane is much more potent than CO2 as a green house gas.

  • Border adjustments (otherwise known as tariffs) should be imposed on goods imported from countries that aren't imposing similar carbon fees, to protect American producers from unfair competition from goods imported from countries that don't have such fees.  This gives other countries an incentive to impose their own carbon fees, so they get the money rather than our government getting the money.  This avoids the need for ambitions, grandiose international treaties that are nearly impossible to get together and even harder to enforce. Revenues from the tariffs would be used to subsidize exports to countries without a carbon tax.

  • In practice, a few high-income people are emitting far more GHG's per capita than the rest, so others, which includes most voters, would be getting more money back in the dividend than they would be paying in higher energy costs, so they would come out ahead, which would create a political constituency to keep raising the fee until it is high enough to motivate the desired reductions in emissions. Also, once people see that they are receiving monthly checks, that also creates a constituency opposed to the politicians diverting the revenues to other ends.

  • The incentives provided by the carbon fee will render a lot of legislation redundant and unnecessary, so that regulations can be repealed, moving decision making from bureaucracy and courts to more efficient and optimal market-based decisions.

  • Generally, it will be much simpler and more efficient for industrialists and policy makers to make decisions based on a fossil fuel price that is taxed to reflect ecological harm, rather than having to hire armies of lawyers to make heads or tails of the reams of Byzantine regulation that would otherwise be necessary.
Drawback
  • Unlawful residents would be negatively impacted, since they would face higher energy costs yet not receive the dividend.  However, by the same argument, social security, medicare, medicaid, and unemployment insurance should all be abolished, since unlawful residents pay taxes that support those programs and don't receive the benefits.  It is virtually impossible to run any kind of decent society without sometimes negatively impacting unlawful residents. That's just a basic, unavoidable fact of reality.
Current Action on Carbon Fee and Dividend
  • The Energy Innovation and Carbon Dividend Act (EICDA, H.R. 2307) is a bill in the federal house of representatives.  Initially sponsored in the last session by several Republicans and numerous Democrats, it was re-sponsored in the current session, and as of April 2, 2022 is co-sponsored by 96 Representatives, and gaining a few more representatives every month.

  • Citizens' Climate Lobby is an organization dedicated to bipartisan solutions to climate change. They focus on many climate bills, particularly EICDA.

  • The Climate Leadership Council is a Republican group with a plan very, very similar to the EICDA, except that they don't have a bill in congress, and their version exempts the fossil fuel industry for legal liability for any fraud they may have perpetrated by telling the public that climate change is not real while internal documents showed that they knew this wasn't the case.  The EICDA does not have this exemption -- it leaves open the possibility of legal action against fossil fuel companies.

  • The idea of a carbon fee and dividend as the right approach to solving climate change is endorsed by:
    • all living ex-Fed chairs
    • 28 Nobel Laureate economists
    • 15 former chairs of the Council of Economic Advisors
    • 2 former treasury secretaries
    • and 3623 other US economists.

    The endorsements above are for the general concept of a carbon fee and dividend, and not specifically the EICDA or the Climate Leadership Council's proposal.  There are other endorsements and editorials supporting the idea.

    Elon Musk has endorsed the idea of a "price on carbon", but his opinions on Carbon Fee and Dividend, specifically, are unknown.


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Bill Chapman