Making a Case for Carbon Fee and Dividend

OP-ED September 23, 2014

The case for a carbon fee and dividend

By John L. Ward

Global warming poses a threat to human health, the natural environment, national security and civilization itself. We are now on track to raise global warming by century’s end five times as much as the increase since 1880, rising to a global temperature higher than any since the first primitive humans walked the earth.

To save much of the world we know, human-caused greenhouse gas emissions must be sharply cut — and soon. We can reduce the danger without economic harm; we lack only the political will to act. Delay makes the problem greater, far costlier to fix and less fixable. Rising temperatures, acidic oceans and extinction of up to half of all species cannot be undone.

smoke_power_plant001_16x9Any human-caused emissions not ended by mid-century must be compensated for by removing greenhouse gas already in the atmosphere. Overwhelming evidence confirms the growing risk, and the scant research attempting to deny or downplay it has not held up.

How can we stop global warming from happening or at least reduce its harm? The answer is to stop emitting greenhouse gasses. There are many ways we can cut emissions, including using less energy by buying more efficient appliances and vehicles and increasing insulation of buildings.

But central to the effort must be a sharp cut in the use of carbon-based fuels, such as coal, oil and natural gas. And the most effective means of achieving this reduction is a tax or fee on carbon. Numerous economists have endorsed a carbon tax, including those in the administrations of presidents Nixon, Ford, Carter, Reagan, both Bushes, Clinton and Obama.

Carbon tax proposals have been attacked as an economy-wreckers, but well-designed ones disprove this claim. British Columbia’s carbon tax passed in 2008, with revenue used to reduce other taxes. Since British Columbia’s tax has been in effect, GDP growth has run slightly ahead of the rest of Canada’s; it has returned more money to taxpayers than it collected from them, resulting in the lowest tax rates in Canada; and petroleum fuel use dropped by 16 percent in British Columbia while rising by 3 percent in the rest of Canada. Greenhouse gas emissions fell by 9.9 percent although most of the province’s electricity comes from clean hydroelectric power. Polls show that 55 to 65 percent of voters approve the tax.

British Columbia’s tax is similar in most ways to the carbon fee and dividend proposed by Citizen’s Climate Lobby for the U.S. (The group is a non-profit, volunteer organization with the single purpose of getting a revenue-neutral carbon fee and dividend passed.)

In the proposal, all dividends would be paid monthly to all citizens equally, a spur to cut the use of carbon fuel or products made and shipped with carbon fuel. The fees would be collected where carbon is taken from the ground or where imports enter the country. The initial fee would be $15 per metric ton of carbon, to be increased by $10 per year.

It would need no government growth: federal agencies that currently collect or disburse payments would distribute the funds. It would require no regulations: the market would determine prices and fuel choice. Government financial help would no longer be needed to back any kind of energy. And it would make carbon fuel pay for the social costs it incurs by polluting air and water and increasing damage from destructive weather inflated by global warming.
Citizen’s Climate Lobby employed Regional Economic Models Inc. to test the effects of its proposal. The firm’s expertise in economic forecasting is relied on by such diverse clients as the American Gas Association, the Florida Legislature, the Nuclear Energy Institute, the Teamsters, the Tennessee Valley Authority, Los Angeles World Airports, Minnesota Power and well over a hundred other companies and institutions.

The firm found that a carbon fee and dividend in use for 20 years, compared with none, produce these differences: CO2 emissions fall 52 percent; jobs grow by 2.8 million; 227,000 premature deaths are avoided; national GDP grows by $1.375 trillion; and dividends rise every year in the period studied: for the 20th year, a family of four (the first two children get half a share) are paid $4,752.

A carbon fee and dividend would also make the U.S. a credible leader in reducing global warming. Showing that a carbon fee or tax has multiple benefits and no serious drawbacks would help convince other nations to adopt similar measures.

You can help blunt the growing threat to our world: tell your legislators to pass a carbon fee and dividend.