Saturday, July 7, 2018

Carbon Fee & Dividend: Variations On A Theme

Everyone has an opinion on climate change.  Opinions range from "the climate is not changing" to "the sky is falling and we're all gonna die".  Outside of opinions there's scientific fact, which, to be sure, changes as new data become available.  And while data points have margins of error, 97% of climate scientists are convinced by the data that the climate is changing due to human activity.  If the climate continues to warm (and, by the way, the rate of change is increasing) we are absolutely all gonna die!  The Earth, in time, will become a hothouse like Venus with surface temperatures high enough to melt lead.

But what can we do about it?  Well, it stands to reason that if humans can cause climate change, we ought to be able to stop it.  Citizens' Climate Lobby believes that we can stop the climate from changing before our planet becomes uninhabitable.  One way to do this is by implementing a policy called Carbon Fee & Dividend.  There are several takes on this plan promoted and supported by various organizations and luminaries.  Most of the proposals depend on bipartisan support in Congress, and these, frankly, are the only ones with a prayer of passing.

First off there is the Schultz-Baker plan, devised by the Climate Leadership Council.  This plan has Four Pillars:
1.     A gradually increasing tax on carbon dioxide emissions imposed at the point where fossil fuels enter the economy: the mine, well, or port.  This fee would start at $40 per ton and rise $5 per ton each year. 
2.     Carbon dividends for all Americans would be generated by the tax.  Initially a family of four could expect $2,000 in payments the first year.
3.     Border carbon adjustments would be made on the carbon content of imports. Imports from countries without a carbon tax would be taxed and those revenues also distributed to all Americans.
4.     Significant regulatory rollback would result since most regulations would no longer be necessary.  This would mean the phasing out of most of the EPA's regulations of carbon dioxide emissions and the repeal of the Clean Power Act.

Another idea put forth by former Senate leaders, Trent Lott (R-Mississippi) and John Breaux (D-Louisiana) manifests itself in the newly-formed PAC called Americans For Carbon Dividends (AFCD).  Lott and Breaux contend that,  due to their new approach to the problem, climate change is an opportunity for both parties to see eye-to-eye and come up with a bipartisan victory. 
1.     Pass legislation that puts a "meaningful" fee on carbon-dioxide emissions, say $40 per ton at the start.  This differs only slightly from the Schultz-Baker plan.  Whereas Schultz-Baker called for the fee increasing by $5 a year, Lott-Breaux leaves the increase, if any, nebulous.
2.     Return the monies collected to the American people. 
3.     Repeal existing carbon emission laws.  This is also in accordance with Schultz-Baker.
4.     But Lott-Breaux goes one step further.  Energy companies become immune to climate-based lawsuits.  This one is a head-scratcher until you realize that it was a carrot to get large energy corporations like Exxon Mobil, Shell, and BP to sign on.  You see, as a result of the 2010 Gulf Oil Spill explosion, BP faced more than 390,000 lawsuits. 

Still, something like this may outline what it takes to get Republicans and business interests to team up with Democrats and environmentalists in order to take real steps toward combating climate change.

Finally there is CCL's own Carbon Fee & Dividend (CFD) plan.  The Citizens' Climate Lobby was founded in 2007 with the mission to lobby for legislation that would end subsidies for the fossil fuel industry by taxing carbon when it comes out of the ground.  The group has grown since its inception with surges in growth recently as more and more citizens are directly affected by the consequences of a changing climate.

CF&D, as it's known, calls for the following:
1.     Place a steadily rising fee on fossil fuels, starting at $15/metric ton, increasing by $10/metric ton/year, imposed "upstream" at the mine, well, or port of entry.
2.     Give the money collected, minus administrative costs, back to American households monthly.  It is projected that at least 2/3 of households will break even or get more back than they pay out in increased prices of carbon-based energy.
3.     Use a border adjustment to stop business relocation, by placing import fees on products from countries without a carbon fee, and by giving rebates to US industries exporting to those countries.

CCL's CF&D leaves out any mention of repealing laws or granting immunity.  But when you think about it, the plan should see existing laws automatically complied with.  And if companies are, for financial and profit reasons, moving away from fossil fuels, lawsuits like BP suffered should automatically become much rarer.  So where do we go from here?  And how do we come together? 

Tony Sirna, the new Data and Strategy Coordinator for CCL, looks on the bright side.  Recently public awareness of, and congressional interest in. carbon pricing as a means to reduce CO2 emissions portends movement toward a national policy.

This momentum reveals itself in the number of new groups forming to address the issue.  There is the Climate Leadership Council (CLC), Students for Carbon Dividends, and now a new well-funded PAC, Americans For Carbon Dividends (AFCD). And some major corporations have signed on like GM, Pepsico, and Unilever, besides oil giants like BP, Total and Exxon Mobil.  Add to the list a few bipartisan political luminaries like George Schultz, James Baker, Trent Lott, and John Breaux.

Can we trust the giant corporations, though?  Maybe we can.  After all, we are all in this together.  Oil giants' CEOs have grandchildren too, and 97% of climate scientists, the "jury", have returned their verdict: Climate change is real, happening fast, and is caused by humans dumping greenhouse gases into the atmosphere.  People are generally good, democracy generally works, and everyone is a potential ally.

As you see, there are some incompatibilities among these plans, and not everyone is going to agree on all points.  But the fact that there is a bipartisan consensus on the reality of global warming is a bright ray of hope.  Neither party is likely to score a filibuster-proof majority anytime soon, so compromise is imperative.  And compromise and cooperation are showing themselves to be possible in the House Climate Solutions Caucus which now boosts 42 Republicans and 42 Democrats working together to find ways to slow, stop, and even reverse, climate change.
We can do this!  Together!

References upon which this article is based:

There are many, many more cogent articles.  Just google "carbon fee and dividend" and pick your favorite source.