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.
The World Bank stresses the urgency of pricing carbon in our efforts to reduce emissions. It 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 – where polluters pay for the damage their emissions cause - helps shift the burden for damage from greenhouse gas emissions back to those who are responsible for it and who can reduce emissions.
• Business leaders and oil executives are beginning to speak in favour of carbon pricing and investments.
A recent study (REMI Study) by the Regional Energy Development Inc. (commissioned by Citizens’ Climate Education Corporation and Citizens’ Climate Lobby) revealed a convincing picture.
The US-based study examined a tax on the carbon dioxide content of fossil fuels. The tax would start at $10 per ton, increasing by $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% after 10 years, and 52% after 20 years. The size of the monthly dividend for a family of 4 with two adults in 2025 = $288. Electricity prices would peak in 2026 and then start to decrease.
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.”
In the United States, there is a rising tide of interest in a revenue-neutral carbon tax for pricing carbon. “A number of prominent politically conservative figures support the carbon fee and dividend system,” says TheGuardian. In July 2014, George Shultz (former Secretary of State) while participating in an M.I.T. webinar on carbon pricing and taxing (alongside other prominent conservatives) was strongly supportive of a revenue-neutral carbon tax.
In Canada, where the Harper government has made the exploitation of the Tar Sands its top priority, no attention is being given to a national tax on carbon. Yet British Columbia’s revenue-neutral carbon tax, implemented in 2008, is a success story - the economy is doing well, emissions are down, and citizens have seen no net increase in taxes.
Finally, a carbon tax that makes sense. Carbon Fee & Dividend is truly an idea whose time has come not only for the United States but also for Canada.