Energy Innovation and Carbon Dividend Act

Carbon Fee and Dividend Legislation

Laser Talk

Question:  What’s in those bills?

Answer:  Carbon fee and dividend bills started to appear in Congress in 2018. The carbon fee and dividend has emerged as the single most effective tool to reduce America’s carbon pollution to net zero by 2050, which explains its growing popularity among lawmakers. [1] It’s based on a CCL-supported framework to account for the hidden costs of burning fossil fuels, thus driving down greenhouse gas (GHG) emissions by stimulating American innovation and ingenuity. Scientists and economists alike [2,3] say it’s the best first step to reduce the impact of global warming.

Here’s how it works in bills that have been introduced so far:

  • A carbon fee is placed on coal, oil, or natural gas as it enters the U.S. economy.
  • The fee starts at $15-$59 per metric ton of CO2 and increases by a set dollar amount  or percentage every year until a final emissions goal is achieved.
  • If emission cuts don’t meet mandatory targets, the annual fee increment becomes larger.
  • Most of the money is distributed equally to American residents as carbon dividends or tax credits, giving consumers cash to spend in any way they see fit, while businesses compete for those dollars by reducing their carbon footprints.
  • A carbon border fee adjustment is placed on emissions-intensive imports, discouraging businesses from relocating to where they can pollute more, and encouraging other nations to price carbon.

Because the steady increase in fossil energy prices is predictable, it will stimulate invention and investment to cut carbon in myriad ways. Consumers will know they can count on increasing dividends to help them through the transition to a world of clean, energy-efficient goods and services.

CCL’s favorite among these bills is the Energy Innovation and Carbon Dividend Act [4], which at the time of this posting has 89 sponsors in the House of Representatives. Hundreds of local businesses, governments, non-profits, faith groups, and prominent individuals [5] are on board with this effective step to address climate change.

In a Nutshell: A Carbon Fee and Dividend policy will rapidly drive down climate-warming emissions by taxing polluters and then dividing that money into ‘carbon cash back’ payments to American households. This incentivizes businesses, investors, and consumers to seek out the best ways to cut emissions without placing an undue cost burden on low- and middle-income Americans.

Related: Comparing H.R.2307 with other carbon pricing bills

  1. Hafstead, M. “Carbon Pricing Bill Tracker.” Resources Magazine, Resources for the Future ( 21 Jun 2021).
  2. Miller, D.H. and J. Hansen. “Why Fee and Dividend Will Reduce Emissions Faster Than Other Carbon Pricing Policy Options.” Our Energy Library (Nov 2019).
  3. “Economists’ Statement on Carbon Dividends.” Wall Street Journal (16 Jan 2019).
  4. “H.R.2307 – Energy Innovation and Carbon Dividend Act of 2021.” Library of Congress (01 Apr 2021).
  5.  “Support for the Energy Innovation and Carbon Dividend Act.” energyinnovatinonact.org/supporters-overview (accessed 07 Apr 2021).

This page was last updated on 11/27/21 at 20:42 CST.