The REMI Study Laser Talk

This page was updated on 01/27/19 at 21:17 CST.

Question:  How do we know the carbon fee & dividend plan will really work?

Answer:  CCL wanted to find out how well a carbon fee and dividend would work, so in 2014, they hired an independent modeling firm – Regional Economic Models Inc. (REMI) – to do just that. The REMI study [1] examined the effects of a carbon fee starting at $10 per metric ton of CO₂ [2] and going up $10 a year for 20 years, with all proceeds returned to households.

This is a little less ambitious than the Energy Innovation and Carbon Dividend Act, [3] but is a fair representation of the type of policy proposed in the bill.

In addition to the national economy, emissions, and changes in energy industries, the REMI study looked at economic impacts across the U.S. The study then compared these results to a business-as-usual case where there is no price on carbon.

Here are the results, compared to business as usual:

• CO₂ emissions decline by 33 percent after 10 years and 52 percent after 20 years. That’s because of strong, steady market-driven changes in the ways we make and consume energy.
• National employment increases by 2.1 million jobs after 10 years, and 2.8 million after 20 years. These are jobs that wouldn’t happen without a carbon fee!
• Reduced air pollution saves 13,000 lives annually after 10 years, with a cumulative 227,000 American lives saved over 20 years.
• Gross Domestic Product (GDP) increases by $70 to $85 billion from 2020 on, with a cumulative increase of $1.4 trillion after 20 years.

The take-home message is that a plan like the Energy Innovation and Carbon Dividend Act will strengthen the economy and creates jobs while slashing CO₂ emissions and improving Americans’ health. More details, regional summaries, graphics, and slides can be found on the REMI report web page. [4]

1. Nystrom, S. and P. Luckow. “The Economic, Climate, Fiscal, Power, and Demographic Impact of a National Fee-and-Dividend Carbon Tax.” Regional Economic Models, Inc. and Synapse, Inc. (9 June 2014).
2. There are three main differences from CCL’s proposal in that (a) REMI modeled the carbon fee starting at $10 per metric ton of CO₂ instead of the $15 proposed by CCL; (b) REMI did not consider the possibility of raising the annual escalation from $10 to $15 as specified in H.R.7173; and (c) REMI did not apply the carbon fee to any greenhouse gases other than CO₂.
3. H.R.763 The Energy Innovation and Carbon Dividend Act of 2019. Congress.gov (24 Jan 2019).
4. “The REMI Report: The Environmental, Economic and Health Impact of Carbon Fee and Dividend.” Citizens’ Climate Lobby (2015).