Arguments
Citizens Climate Lobby - Pushing for a US Carbon Fee and Dividend
Posted on 18 June 2013 by dana1981
Citizens Climate Lobby (CCL) is a group that formed in order to organize and empower citizens to push for a carbon fee and dividend – the preferred solution of former NASA climate scientist James Hansen.
The Importance of Carbon Pricing
Putting a price on carbon emissions is a key climate solution. Failing to price carbon emissions is effectively a massive subsidy, estimated at about $800 billion per year globally by the International Monetary Fund. However, that estimate was based on a carbon damages cost that was recently revised upwards by about 50% by the US government, based on up-to-date economic modeling. Using conservative assumptions, global subsidies for the climate costs of carbon emissions now exceed $1.1 trillion per year, and may be much higher.
The absence of a carbon price to account for those costs is a failure of the free market. It prevents citizens from making informed purchasing decisions, because the actual costs of the products they buy are not accurately reflected in their market prices. When it comes to climate costs, American and Canadian consumers are flying blind. Unfortunately we can't avoid paying the costs of climate damage forever, and they are reflected in effects like rising food prices when crops are decimated by extreme weather like heat waves and droughts, with contributions from human-caused climate change.
Why Fee and Dividend?
Personally as long as we implement a carbon price, I don't have a strong preference about what form it takes. There are a number of options, with cap and trade and carbon taxes being the most commonly implemented. Once a carbon price is put in place, there is also the question what to do with the generated funds. Some prefer that they be used to fund low carbon technologies to help solve the climate problem, while others would prefer they be used to balance government budgets, and others prefer that they be returned directly to citizens as a 100% dividend.
A fee and dividend effectively taxes carbon emissions, collects and divides up that revenue, and gives 100% of it back to all citizens equally. Most people get the same or more money back as dividends than they'd pay in higher energy prices, but they'd make even more money by using less fossil fuel energy.
CCL advocates for the fee and dividend approach for two main reasons. First, it's probably the simplest 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 citizens. However, since we would know about the carbon fee and that it will continue to rise, people would have an incentive to transition away from high-emissions products to minimize their costs and potentially make money from the carbon fee and dividend system.
There are also reports that interest in a carbon fee is 'creeping up' among US Senators. Perhaps most importantly from a practical standpoint, as noted in my Op-Ed in the Sacramento Bee with CCL's Mark Reynolds, a number of prominent politically conservative figures support the carbon fee and dividend system. This is critical because the only way to pass any sort of climate legislation is to bring some conservative support on board.
Recently the Heartland Institute (which once again is in the news for all the wrong reasons) and R Street Institute debated the subject of a carbon fee. The R Street Institute split off from Heartland over its climate denial and Unabomber billboard (see Peter Sinclair's interview with R Street Institute founder Eli Lehrer). After the debate, a large majority of the audience of political conservatives and libertarians sided with the R Street Institute in support of a carbon fee.
What Does CCL Do?
CCL trains and supports volunteers to become effective advocates for a carbon fee and dividend system. Whenever a new CCL chapter is created, someone comes to that community and leads a 3-hour workshop to explain how CCL works and gives them the tools they need. CCL holds monthly conference calls, where groups come together to take action and listen to the call. These conference calls can include talks by climate scientists, discussions of recent CCL achievements, and training on important subjects (for example, what to tell a person who argues that American and Canadian climate action is pointless given Chinese emissions growth).
The group has grown rapidly, nearly doubling in size every year, now with over 100 chapters, most in the USA and some in Canada. CCL helps its members write and publish articles in local media, and is now generating over 100 published pieces per month, like mine in the Sacramento Bee. A carbon fee is being discussed more and more frequently in the USA, and as a result, the Koch brothers felt compelled to launch an advertising campaign attacking politicians who might support this type of system. There has certainly been some political movement in this direction, with a carbon fee being discussed more and more frequently as a viable policy solution.
CCL has the support of some big names, with endorsements from climate scientists James Hansen and Katharine Hayhoe.
CCL is also exploring the possibility of launching some UK chapters. Although the UK is part of the European carbon cap and trade system, that system is experiencing difficulties, and CCL aims to maintain UK support for carbon pricing.
Fourth Annual Conference and Further CCL Details
CCL is holding its fourth international conference in Washington D.C. on June 23–25, 2013, with James Hansen as the keynote speaker. Its first conference had 25 attendees; they expect 375 this year and ambitiously plan to hold meetings with every Senate and House office during that time.
The rate of growth and media penetration of the group has been impressive. In addition to the now over 100 Op-Eds, columns, and letters to the editor published by the group per month, CCL was recently featured in a New York Times piece by David Bornstein, Lobbying for the Greater Good. The article provides a lot of detail about CCL.
Ultimately, CCL provides a path through which ordinary citizens who want to do more to solve the climate problem than just clicking online petitions can become involved. The group doesn't require any special skills, just a desire to try and help grease the wheels for climate policy in the USA and Canada. CCL provides useful training, but doesn't require a large time commitment from its members. And the group's focus on a single specific climate solution (carbon fee and dividend) provides a helpful focus for the group's members.
For further information about the group, see the CCL FAQ, follow its local chapters on Facebook and the main group on Twitter, and consider attending its annual conference this weekend.
"collects are divides" should be "collects and divides"
Waiting to put a price on carbon pollution just lets the fossil fuel industry continue to treat our atmosphere as a free sewer. Waiting just makes the problem worse. The sooner America jumpstarts a clean energy economy, the more competitive we'll be in the near future.
Fee and Dividend is a very elegant solution. It' s revenue neutral and uses the Tragedy of the Commons for the benefit of the environment. Peolpe will tend to put less money in the box that will be redistributed. You don't allow the government to use it as an excuse for an extra tax, and you put the right incentives towards clean technologies. What's not to like?
Fee and dividend seems to be a promising approach. Clearly some payment for the use of carbon is needed. Fee and dividend would answer the critics that would otherwise say a carbon payment is simply the government trying to take more tax. However the details of who it's paid back to would need attention. Those at the bottom of the income scale probably have the least control over their carbon wastage but would receive the same dividend as those who have more. Also returning the money through tax filing wouldn't help those who pay no tax. But the idea looks promising.
I like this approach. My main question is if we would also need to implement a tariff based on the energy intensity of each import. It should be fairly straightforward to calculate. I believe it should include all the product inputs but subtract the carbon fees already paid. The main problem may be political since special interests would protect their markets or reduce the cost of their inputs. The response to that may simply be to keep the tariff reasonable and broadly applicable.
Eric,
I believe the approach is to tax only the root fossil fuel... gas, petroleum, whatever... as it enters the economy. This will in effect tax all products that make use of that fuel in production, transport, etc., and will in that way avoid any double counting.
Of course, this means that certain producs that are imported will have avoided the carbon tax, but this should be the great minority. The solution would be to increase tariffs on imported products to account for the discrepency (based on the country of origin's own carbon policies as well as any expected, underlying carbon footprint for the product).
Of course, that discrepency would be solved very simply through a global agreement, where every country follows this approach in the same way, but that also entails difficulties in the proper distribution of the dividend, as well as simply being impossible to do, given how the USA has rejected/sabotaged any such international cooperation to date so far.
Eric @5: CCL supports a tariff on imported goods to protect domestic manufacturing, citing Joost Pauwelyn's work. The tariff will also encourage other countries to put a similar price on carbon pollution so their imports aren't charged.
There is an added benefit to Fee and Dividend. People who are on the bones of their backsides will spend every cent of this money as soon as they receive it just to feed their kids and keep their houses warm. A big chunk of this money comes back to the government at every transaction. When they buy food VAT goes government-ward. When the super market makes more profit more go the government, when they buy from their suppliers.............. etc. the govt then has to borrow less money to keep the economy going. When they spend this money to build a bridge or repair a road, etc. more money back to them and some good and necessary things get done. Win win all around.
Sphaerica and Dumb Scientist, thanks for the replies. I like DS's conclusion as expressed in this sentence from the second link: "If competitiveness provisions were to be used as a sweetener to enable the adoption of domestic climate legislation, the WTO consistency of such provisions is, therefore, crucial."
If it works it reduces the need for a rigid global carbon fee agreement which probably would not pass, it incorporates the carbon issue into broader trade agreements which gives it more weight, and it incentivizes every country to raise their own fee. In poorer countries it seems to me that the workers there would effectively get a wage increase based on the energy intensity of what their country produces.
It is very important what is done with the money collected as a carbon tax. Rather than give it to every citizen, give it in equal parts to every registered tax payer, whether or not they are paying tax currently. This has the great advantage that the data base already exists so there will be virtually no cost in implimenting it. Then don't let the legislators give this money as a tax reduction. You want to get this money into the hands of your poorest citizens. They will instantly spend all this money just to keep their heads above water and the money will come into the market to generate more taxes at all levels. After about 4 transfers of this money it is almost all in the hands of the government but in it's passage, it has "done good". The government can then start to pay off the national debt or at least borrow less. The amount of money in the system is of very little importance. The rate at which it circulates, of huge importance. Of course it would be insane to impliment such a system before cutting all subsidies to fossil fuel companies and transferring these subsidies to renewable energy companies.
Eric and others may be interested in this article on border tariffs.