Carbon Fee and Dividend

Carbon Fee and Dividend

CCE empowers volunteers to educate officials and the public about the nuances of numerous climate solution models, including the Environmental Protection Agency’s Clean Power Plan and the cap-and-trade systems in place in Europe and New England. However, our preferred solution is a national, revenue-neutral, carbon fee-and-dividend program (CF&D), which we consider the fairest and most efficient means of reducing carbon and fighting climate change.

Carbon fee and dividend details

A major strength of a revenue-neutral carbon fee-and-dividend program (CF&D) is its simplicity. Under one CF&D scenario:

  • A fee of $15 per ton of carbon is placed on fuels at their point of entry into the economy, such as a well, mine, or international shipping port.
  • The fee starts small, at $15 per ton of carbon. It then rises steadily and predictably, increasing by $10 per ton per year.
  • All money collected is returned to American households equally in the form of a monthly energy dividend. No fees go to fund any other government spending.
  • A border tariff on imports from all countries that lack a similar pricing system protects U.S. businesses and incentivizes other countries to adopt similar legislation.
  • A “border adjustment” places a tariff on imports from any country that doesn’t already have a similar carbon fee. This removes incentives for American manufacturing to move overseas. Just as importantly, it guarantees that any country doing business with America will pay a carbon fee, whether levied within its own domestic economy or upon shipping goods to the United States.

Impact of carbon fee and dividend

A recent CCE-commissioned study by Regional Economic Models, Inc. (REMI) found that a system nearly identical to the above would create powerful economic incentives to shift to renewable energy, cutting carbon emissions to 50% below 1990 levels within two decades. Meanwhile, returning 100% of fees collected to American households would shield the poor and middle-class against rising energy prices—an absolute requirement for any just climate policy.

Beyond its contribution to fundamental fairness, revenue-neutrality often appeals to legislators who might be open to climate action, but remain leery of adding to the size or budget of the federal government. At the same time, the border adjustment would create strong economic pressure to establish carbon fees internationally, paralleling the moral pressure exerted by the U.S.’s adoption of its own far-reaching climate plan.

Furthermore, a price on carbon would reduce the airborne pollutants that cause disproportionate rates of emphysema and other respiratory illnesses in impoverished communities, thus preventing up to 13,000 premature deaths per year in the United States alone. This decrease in preventable deaths and illnesses accounts for many of REMI’s impressive economic findings, with cuts in sick days and health care costs—and, via the dividend, an increase in personal funds available for necessary health care spending—contributing to the predicted creation of 2.8 million jobs over baseline in the first 20 years.

By training volunteers in the scientific, economic, political, and ethical dimensions of climate change, CCE empowers them to educate officials and the public about these and more aspects of a strong climate solution. The resulting climate constituency is as informed and effective as it is vocal, producing positive outcomes disproportionate to its own rapidly-growing numbers.