Carbon Fee and Dividend. Its Time Has Come

There is one thing stronger than all the armies in the world, and that is an idea whose time has come. According to Joseph Stiglitz, the world-renowned global economist and Columbia University professor, putting a price on carbon is a no-brainer. “I believe that over the long run we will have to have a carbon tax, the world will come around to this,” says Stiglitz.

Carbon Fee and Dividend. Its Time Has Come

Carbon Fee and Dividend. An idea whose time has come The World Bank recognizes the urgency of pricing carbon and supports recent attention on carbon coming from around the world:

  • Carbon pricing is gaining attention as a way to address climate change. About 40 countries and more than 20 cities, states and provinces use carbon pricing mechanisms such as emissions trading systems and carbon taxes.
  • A price on carbon helps shift the burden for damage from greenhouse gas emissions back to those who are responsible for it and who can reduce emissions.
  • The private sector has been increasingly outspoken in its support for consistent carbon pricing. and investments

The choice of instrument for putting a price on carbon will vary widely. There are two main types of carbon pricing: Emissions Trading Systems and Carbon Taxes. The choice of mechanism depends on the political and economic circumstances of each jurisdiction: country, province, state, city.

The REMI Study

A recent study by the Regional Energy Development Inc. (commissioned by Citizens’ Climate Education Corporation and Citizens’ Climate Lobby) revealed a convincing picture of The Economic, Climate, Fiscal, Power and Demographic Impact of a National Fee & Dividend Carbon Tax.

The study examined a tax on the carbon-dioxide content of fossil fuels. The tax would start at $10 per ton, increasing at $10 per ton each year. Revenue from the tax would be returned to households in equal shares as direct payments. Under this approach, the REMI study found that recycling the revenue back into the economy would add 2.1 million jobs over ten years. Improvements in air quality would save 13,000 lives a year. Emissions would decline by 33 percent. What this study shows is that by giving the revenue back to the people, a carbon tax will actually stimulate the economy,” said Mark Reynolds, executive director of Citizens Climate Lobby, which commissioned the study. “The big knock on a carbon taxes has been that it would kill jobs. That assumption is now blown out of the water. (Source: CCL Press Release)

Carbon Fee and Dividend. An idea whose time has come Study Highlights: (Source: Summary of REMI Study)

  • CO2 emissions decline 33% after only 10 years, and 52% after 20 years relative to the baseline, $0/ton of CO2 case
  • National employment increases by 2.1 million jobs after 10 years, and 2.8 million after 20 years. This is more than a 1% increase in total US employment we don’t get without a carbon tax
  • 13,000 lives are saved annually after 10 years, with a cumulative 227,000 American lives saved over 20 years
  • $70-$85 billion increase in GDP from 2020 on, with a cumulative increase in national GDP due to F&D of $1.375 trillion
  • Size of monthly dividend for a family of 4 with two adults in 2025 = $288, and in 2035 = $396. Annually, this is $3,456 per family of 4 in 2025 ($1152 per capita–children get ½ dividend)
  • Electricity prices peak in 2026, then start to decrease. Real incomes increase by more than $500 per person in 2025. This increase accounts for cost of living increases
  • Maximum cost-of-living increase by 2035 is 1.7-2.5%, depending on region
  • Electricity generation from coal is phased-out by 2025
  • Biggest employment gains in healthcare, retail, and other services (excluding public administration). This is because people have more money in their pockets to spend, and these industries are labor-intensive, responding to increased consumer spending by creating more jobs
  • Regional Gross Product is steady or rising in 8 of 9 regions

TheGuardian reports that Citizens’ Climate Lobby advocates for the fee and dividend approach for two main reasons:

First, it’s probably the simplest carbon pricing 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 the public. A carbon fee and dividend system has been implemented in British Columbia since 2008 with great success – the economy is doing well, emissions are down, and citizens have seen no net increase in taxes.

“There are also reports that interest in a carbon fee is ‘creeping up’ among US Senators…..a number of prominent politically conservative figures support the carbon fee and dividend system,” says TheGuardian. For further information about the group, see the CCL FAQ, follow its local chapters on Facebook and the main group on Twitter, and/or attend its annual conference this weekend. Finally, a carbon tax that makes sense. Carbon Fee & Dividend is truly an idea whose time has come. 

Related Posts:

Let’s Put a Price on Carbon with Fee and Dividend

Five Ways to Price Carbon


Rolly Montpellier, founder of BoomerWarrior
Rolly Montpellier is the Founder and Managing Editor of BoomerWarrior.Org. He’s also a  Climate Reality leader (Climate Reality Leadership Corps), a blogger, an activist and a Climate Change presenter.
He has been a contributor to the Climate Change Guide, The Canadian, ClimateMama, The Hill Times, World Daily, Georgian Bay News, The Elephant, CounterCurrents, 350Ottawa and MyEarth360.
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