Despite grindingly slow progress in the United States with decarbonization by means of energy adaptation, the world has actually moved a few steps ahead in the past year. That makes it time to revisit the simplest mechanism for greenhouse gas reversal: a phased-in, revenue-neutral carbon fee and dividend strategy. “Fee” rather than “tax,” because as George P. Shultz, former Secretary of both the Treasury and the State Department, famously said, “It’s not a tax if the government doesn’t keep the money”; “dividend,” because it goes out to all the stockholders—which for the first time explicitly include everyone who lives above the ground from which the resources are taken. In fact, it is the only revenue return mechanism that will reach every American.
Early last summer, the Citizens Climate Lobby put together a decarbonization policy proposal to take the sting out of continuing to burn carbon-based fuels without affecting the public good. It is an intriguing plan that built on an idea Dr. Jim Hansen of Columbia University voiced at several June-July 2008 talks (Climate Threat to the Planet: Implications for Energy Policy).
CCL put some good numbers behind it and verified them through a third-party nationwide macroeconomic study by Regional Economic Modeling, Inc. CCL’s tested 2014 mechanism is an efficient, transparent, and enforceable Carbon Fees Trust Fund.
“But what’s changed since last year?” A couple of things:
- We’ve just lived through the hottest year in recorded history (i.e., since 1880). The long-term trend of global surface temperatures shows an unmistakable rise, and in a way that is likely to alter the planet deeply and suddenly.
- Nations of the world are nearer to agreement on mechanisms for climate adaptation than ever, thanks to the inclusiveness and success of the Lima talks in December and some international announcements that have followed.
- Even the raucous political debate in the United States has shifted, as shown by a change in the certified assumptions of Congress.
Refining the last point, within the past week, almost all (about 98%) of Congress has now agreed on the first step of causation of climate change. A chink has opened. Lawmakers have roundly accepted the initial premise of the CCL proposal: that climate change is real.
Of course, the Senate has stopped short of confirming human-caused climate change thus far (barely, by one vote short of 60). Along with the assumptions of the fossil fuel industry itself, whispered in talk of stranded assets, API inclusiveness, and cap-and-trade participation, we now have virtual unanimity on the existence of climate change—which endangers human health, the natural environment, the economy, and US national security and presents an unacceptable risk of catastrophic impacts to human civilization— and we are on the very edge of declaring decarbonization a national priority.
The EPA’s infographic (above) confirms the much-cited idea that factors other than energy sector carbon emissions are involved, too. Deforestation stands out prominently. In addressing that large source of anthropogenic climate change, national and regional efforts have combined to bring about some positive environmental results, especially in Mexico, Brazil, and central Africa (see chart at right). It’s no hubris or blasphemy to claim this decarbonization through reforesting as a workable human effort to adjust nature for net climate gain.
CCL cites climate scientists and economists who say fee and dividend eclipses cap-and-trade schemes as the best first step “to reduce the likelihood of catastrophic climate change from global warming.” The plan mandates use of existing Treasury, Department of Energy, and Department of Commerce capabilities, includes scientific measurability, annual review, and IPCC concerns. It is also separate from the ins and outs of our existing tax mechanism, thus placing no additional burdens or responsibilities on the Internal Revenue Service. Also, the alternatives appear only partially effective at best: doing nothing, which becomes more costly every day; the imperfections (shell game, some would say) of cap-and-trade schemes; putting money into expensive, time-consuming, and still experimental carbon capture schemes; or other yet unvoiced possibilities.
Below, three minutes from former Treasury and State Department Secretary George P. Shultz, Bill Nye the Science Guy, and Robert Reich, Professor of Public Policy at the University of California at Berkeley, author, former Secretary of Labor, and quite an amateur cartoonist.
Herewith some quick details of the program. For more information, consult the frequently asked questions section of the CCL website.
Basics of the carbon fee and dividend decarbonization system
- Place a steadily rising fee on the CO2 content of artificially cheap fossil fuels.
- Give all of the revenue from the carbon fee back to households.
- Use border adjustments to ensure both fairness and competition.
- Satisfy the needs of people, the economy, and the climate.
- Regional Energy Deployment System (ReEDS), built by the National Renewable Energy Laboratory and run by Synapse Energy Economics;
- Carbon Analysis Tool (CAT), an enhancement of the open-source CTAM model populated by data from the US Energy Information Administration; and
- REMI PI+, a proprietary dynamic model of subnational units of the US economy whose methodology and equations are peer-reviewed and available to the public.
Specific decarbonization actions
- Impose a carbon fee on all fossil fuels and other greenhouse gases at the point where they first enter the economy.
- Place funds in the Carbon Fees Trust Fund (independent of current taxing mechanisms) and rebate it 100% to American households.
- Place a fee on leaked methane—a potent climate changer now perceived by most scientists, and last week acknowledged by the President—including both its direct and indirect effects, over the 20-year global-warming potential, and payable by the entity responsible.
- Align US emissions with the physical constraints identified by the Intergovernmental Panel on Climate Change, of which the US is an important member, to avoid irreversible climate change. (Proposed mechanisms: Annual Department of Energy review, yearly price increases of at least $10 per year, continuation until total U.S. CO2-equivalent emissions drop to 10% of US CO2-equivalent emissions measured in 1990.)
- Adjust for international economics by charging Carbon-Fee-Equivalent Tariffs for imports to the US from countries without comparable Carbon Fees/Carbon Pricing, and by issuing Carbon-Fee-Equivalent Rebates to reduce the price of exports to such countries and to ensure competitiveness of US goods in those countries.
- Drive an effective transition to a domestic-energy economy that is fair to individuals, businesses, utilities, manufacturers, services, farms, manufacturers, and trade partners.
- Stimulate investment in less harmful alternative-energy technologies such as solar and wind.
- Incentivize energy-efficiency for business.
- Reduce industry’s carbon footprint while retaining competitive advantages.
- The measures in the proposed CCL decarbonization legislation will benefit the economy, human health, the environment, and national security—even irrespective of global temperature effects—by correcting market distortions, reducing non-greenhouse gas pollutants, reducing outflow of dollars to extranational oil producers, and improving US energy security.
- Such legislation will support a more stable economy by straightening out the widening and unpredictable swings of energy pricing and the harmful boom-bust development cycle.
From Hansen’s nugget announced six years ago through current support from increasing numbers of citizen advocates, proponents of fee and dividend decarbonization model note that legislation will place the United States in a position of world leadership on climate change. The events of the past year have only increased that potential.
The US has already broached climate change solutions in both regulatory and diplomatic forums. The fee and dividend proposal adds substantial weight because its adoption by the nation would constitute leadership by domestic example.
For two narrated videos of the REMI model, click here. You can find further information from the Citizens Climate Lobby on its website and at this link. The organization is planning an international meeting in Washington DC from June 21-23, 2015.
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