The Little Engine That Could: Revenue Neutral Carbon Fee and Dividend by CitizensClimateLobby

OK, seriously, you are burying the lead. Your steps just stir up climate denial conflict. Focus on your selling point. The DIVIDEND! We citizens get money in our pocket. YAY! At least this is my understanding. Correct me if I'm wrong. How does giving US the money make for better energy decisions by the industry? Well, first of all, they can't run from their externalities anymore. Now that we citizens will get a dividend for pointing it out, we will start looking more closely at the costs of the fossil fuel industry. So now, they have to pay this dividend for polluting, and we get the money. We use it for whatever - market forces, we know best what we need. That's not relevant. The only thing relevant to the oil companies is they are losing out on their profits. So they switch over to other forms of energy production that don't have those CO2 externalities. They are now motivated to become efficient and to retool their portfolio. It's great! It's all about human nature. Throw in this story by Michael Lewis about how the Icelanders got to be so wealthy in the first place, and what is really behind the utility of fee/cap/trade schemes: http://books.google.com/books?id=v_-dfpjo3rcC&pg=PA28#v=onepage&q&f=false

Rezwan, Thanks very much for your insightful comments, especially the first. I've reworked the proposal and intend to incorporate more suggestions as they arrive. PJ

Doron, Thanks for your insightful comment. You are correct that the pricing should apply to everything, and that is why imposing the fee at the very top of the economy, "upstream" as they say, is the way to send the broadest possible price signal. Prices will rise in proportion to their carbon intensity, giving manufacturers strong incentives to invest in more efficient processes throughout the entire supply chain. Thus, changes come about via price incentives rather than government mandates. Recycling the revenues back to households addresses the inevitable inflation that must occur. As long as home budgets stay fairly level, people will be okay, as their purchasing power will not erode. Getting money from the government is also a powerful Pavlovian signal that will create good will on the part of voters, and thus political support. Industry needs the reassurance that the pricing is predictable long into the future in order to commit capital to the transition. Thank you for your support. PJ

If Exxon and BP were voting, I believe "the little engine that could would be their choice. Exxon's climate principles line up almost perfectly with this plan. Here are recent quotes: On page 18 of the ExxonMobil Climate Risk Report of 3/31/2014: "When governments are considering policy options, ExxonMobil advocates an approach that ensures a uniform and predictable cost of carbon; allows market prices to drive solutions; maximizes transparency to stakeholders; reduces administrative complexity; promotes global participation; and is easily adjusted to future developments in climate science and policy impacts. We continue to believe a revenue-neutral carbon tax is better able to accommodate these key criteria than alternatives such as cap-and-trade." From the BP web site on March 19, 2014: A Letter from Our Group Chief Executive - Bob Dudley, Group Chief Executive, BP "Open and well-informed discussion – between governments, business, academic bodies, non-governmental organizations and the public – is vital as priorities are debated and solutions developed. And BP plays its part in this discussion, particularly in encouraging governments to apply a carbon price. This would level the playing field by incentivizing the production and use of lower-carbon options."

Chris, we have been approaching this process from the point of imagining how support for a carbon pricing scheme could be mustered to convince reluctant legislators rather than from a position of tweaking the legislation itself to satisfy opponents. Since you are posting a proposal yourself, which I have not had time to review--though it looks appealing at first glance--you are surely aware that there is advice from the reviewers on how to farm the entries in this contest that read thus: Mobilization Strategies Climate change has become an increasingly politicized issue within the U.S. political system; generating support within the U.S. Congress to pass a form of carbon pricing will require a political mobilization strategy. Political mobilization around carbon pricing could take a variety of forms. Support might be cultivated amongst political elites (e.g. through direct engagement with elected representatives during a Congressional session), through strategic engagement during Congressional elections, or through shaping the policy preferences of a particular political party. Alternately, political mobilization strategies might focus on large-scale public mobilization and/or the nurturing of a grassroots social and political movement to generate support for policy enactment. Many creative possibilities exist. Proposal Guidelines This contest asks entrants for novel policies, new mobilization strategies, or combinations of the two that could lead Congress to successfully enacting legislation that places a price on carbon emissions and/or other greenhouse gases. Top proposals will discuss the relationship between policy proposals and the political mobilization strategy necessary to support a policy’s enactment. Contestants should pay particular attention to the specifics of how policy design can facilitate or hinder the political viability of that policy. We are attempting to be particularly mindful of the "mobilization strategies" part of these guidelines. As for collaboration, we are just now beginning to circulate our work to a widening circle of CCL members. Based on their feedback and our adherence to these guidelines, the pace of work is quickening. Your observations are gratefully received. I'll get back to you about your work asap. Gary

In my economics classes I was told that there were only three things we could do with anything we ever purchased. They were to consume it totally, to give it away or to sell it. I think my economics professors missed one. I think you can also get a loan against it. One of the biggest drawbacks of all carbon proposals is that the owners of the coal, gas and oil have both tremendous value in the existing use of their carbon but in the capital and labor required to bring it to market. All existing carbon proposals I have seen would take away their wealth. What if an opposite tact is used. What if we can design a method so that they can keep their value but that they lose their value as their product gets consumed. If it is possible that a World Bank loan system be developed so that their carbon becomes more valuable to them in the ground then consumed they become partners and not opponents. We very well might need that carbon in the atmosphere in the future if another Ice Age occurs to limit the damage that could cause. That would make existing carbon resources far more valuable. Make them like the family jewels to be able to use their wealth in times of emergency but otherwise husbanded away and protected. Most respectfully Bruce

Mark Tabbert, Thanks for adding the statements from Exxon and BP. One of the RNCFD's most important features is that it lends predictability to industry for planning purposes. If you're a corporate planner, volatility is bad, predictability is good. The fossil fuels will be necessary for a long time to come and these companies have plenty of time to reinvent themselves as energy companies in a few decades. They should so signal to members of Congress that they either support or at least don't oppose intelligent legislation to shift over to clean (and free) fuels.

Can I ask a question , what money come from carbon price use for ?

Hi, Thanks for the interesting proposal and you know that many attempts were made in the past in US Senate like the recent S. 332 'Climate Protection Act of 2013' which talks about a fee of $20 and dividend distribution to American public. Some recommendations to make such CFD proposals stronger could be 1. Conduct a thorough economic impact study like what level of carbon fee should be imposed ($20 or $10 etc) and what will be the impact on price and more importantly on the jobs. I can see a recent study referred in your website - http://citizensclimatelobby.org/press-release-june-9-2014/ 2. To garner international support the "carbon equivalency fee on imports" or the Border Tax Adjustments has to dealt very carefully as BTA is sensitive and might trigger strained trade relations ships between the countries. More studies has to be done on BTA like the one below http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?article=1484&context=sdlp All the best!!

Have you calculated an administrative cost for implementing this proposal. The tax will need to be collected and an enforcement scheme supported. Likewise, the dividend will carry a cost. How will it be administered, and how do you verify eligibility?

I agree with: “As long as fossil fuels remain artificially cheap and profitable, their rising use threatens our survival. Their price must reflect their true social costs” (from Proposal Summary). I believe that a carbon tax will be a key feature of a comprehensive response to the climate change challenge. I support this proposal. I do not know much about the landscape of organizations advocating for a carbon tax (and dividend)—and maybe it would be helpful to provide a brief overview of such organizations, and how close (or not close) proposals for a carbon tax are. However, it does seem that Peter Joseph and Gary Horvitz—both with Citizens Climate Lobby—are working with an organization that has already, and can continue to, do much to make the carbon tax a reality…. “CCL is a 5 year old nonprofit volunteer organization focused exclusively on passing a revenue-neutral carbon fee and dividend (CFD). It empowers individuals to find their voice in the climate debate by providing tool kits for direct lobbying of local and national elected representatives and their staffs; creates focused actions to expand members’ personal political power; trains them in placement of public comments in print media; builds relationships with editorial boards; and organizes at a grass-roots level to build consensus. Monthly conference calls with top-level speakers educate citizen lobbyists on the issues. “Building political will for CFD: Last year, CCL volunteers conducted 710 meetings with federal legislators….” (from “What actions do you propose?”) I did have a difficult time finding out what the Citizens Climate Lobby advocates for with regard the dividend part of the proposal—and it seems like more specifics on that, in the proposal, might be helpful. And I looked for such information at the CCL website also. Eventually, I did find, in Comment #17 (Gary Horvitz): “The revenue collected from the tax is distributed equally to all households. The people who receive the revenue decide what to do with it. Not the government.” My own thoughts, just thinking in terms of what would be helpful and represent a just distribution, are that it seems the dividend could be divided in two ways: 1) Support--Creating sustainable habitats which are positive carbon use models (Findhorn Ecovillage and the Centre for Alternative Technology are two examples; and the ecovillage/permaculture model is one category which fits here…) a) Findhorn Ecovillage (from https://www.findhorn.org/aboutus/ecovillage/ecovillage-at-findhorn/ ) The Findhorn Ecovillage is a major centre for holistic learning serving thousands of visitors each year from around the world has an ecological footprint that is around half the national (UK) average features more than 100 ecologically-benign buildings supplies energy from four wind turbines is part of the ORIGIN project seeking to synchronise energy demands with locally generated electricity boasts a biological Living Machine waste water treatment system installed a 250kW biomass boiler in 2010 to serve the central Park area, reducing carbon emissions by around 80 tons a year includes numerous solar water heating systems is part of a comprehensive recycling system is the publisher of the UK’s first technical guide to ecological housing has a share-issuing community co-operative and a local currency is served by a car-sharing club that includes zero-emissions electric vehicles b) Centre for Alternative Technology (from http://content.cat.org.uk/index.php/about-cat-what-do-we-do ) “CAT is an education and visitor centre demonstrating practical solutions for sustainability. We cover all aspects of green living: environmental building, eco-sanitation, woodland management, renewable energy, energy efficiency and organic growing.” “Our site is a unique and valuable practical demonstration centre, a living laboratory with an enormous range of live examples of sustainable solutions.” 2) Direct Assistance—While some of the dividend discussion I did find recommended across the board checks to all households, it seems like some of that might result in furthering the investments and behavior which are now termed “social and environmental externalities”. Much better to use the carbon tax revenues to help people build positive carbon use models, and to assist those people negatively affected by climate change who cannot help themselves (the most disadvantaged and vulnerable). Would the proposal lose support then, if everyone wasn’t going to get something out of the dividend part. Well, everyone could get something out of it if their communities had many initiatives which were creating sustainable habitats which are positive carbon use models. Does that make sense? It would be like a matching grant…. In this sense, although the analogy is more indirect than direct, the dividend might be used is a way similar to how tobacco taxes are used—to prevent further damage (support), and to alleviate damage already caused (direct assistance for those in need).

Thanks Peter, I understand your explanation—that there are such political considerations—and you may have thought that I gave little attention to those political considerations when I made my suggestions for what could be done with the dividend. In fact, my way of thinking is just so: I try to think through issues (whether in my life, in personal relations, in the community I live in, etc) giving as much consideration as possible to what makes sense. And these political considerations about the dividend seem to me a case in point (other examples: the UN Climate Summits, the proposal “Climate Change Warning on Gas Pump Nozzles, food sovereignty/food security, EPA regulations concerning gas mileage, etc) where there are so many trade-offs which need to be made to get a “one size fits all” top-down approach that there is significant risk of that people involved will lose sight of common sense—unless they do also give sufficient attention to “getting it right at the local level”. What I am saying is not to negate sincere efforts wherever they be found, as we live in a very complex world, and need solutions coming from all quarters. However, there could be a “teachable moment” here, with regards to the carbon tax dividend, “one size fits all” top-down approaches, and the advantages of working out the issues at the local level. In the “Climate Change Warnings on Gas Pump Nozzles” proposal (in the “Shifting Behavior in a Changing Climate” contest), for example, Rob Shirkey (proposal creator) says in Comment #2 (in response to “But how will you get industry to go along? Not willingly. You will have to have it legislated. Good luck with that”): “You're right, we're not aiming to persuade industry to go along, we're wanting to get municipalities to pass laws that would require the labels of gasoline retailers as a condition of maintaining their license to do business in the community.” And in Comment #9 (same proposal), I commented: “There is a similar approach being taken in the Food Sovereignty/Food Security/Local Food Movement, which might be useful to the thinking of the project team, so I’ll share an example”. The example I shared included the following: Maine Town Passes Landmark Local Food Ordinance SEDGWICK, MAINE – “On Saturday, March 5 (2011), residents of a small coastal town in Maine voted unanimously to adopt the Local Food and Self-Governance Ordinance, setting a precedent for other towns looking to preserve small-scale farming and food processing. Sedgwick, located on the Blue Hill Peninsula in Western Hancock County, became the first town in Maine, and perhaps the nation, to exempt direct farm sales from state and federal licensing and inspection. The ordinance also exempts foods made in the home kitchen, similar to the Michigan Cottage Food Law passed last year, but without caps on gross sales or restrictions on types of exempt foods.” (from text of ordinance) “We recognize that family farms, sustainable agricultural practices, and food processing by individuals, families and non-corporate entities offers stability to our rural way of life by enhancing the economic, environmental and social wealth of our community. As such, our right to a local food system requires us to assert our inherent right to self-government.” There are historical examples of this kind of “get it right at the local level first” kind of thinking. The “swadeshi” principle of Gandhi’s can be associated with this “local level first” thinking: “According to the principle of swadeshi, whatever is made or produced in the village must be used first and foremost by the members of the village. Trading among villages and between villages and towns should be minimal, like icing on the cake. Goods and services that cannot be generated within the community can be bought from elsewhere. “Swadeshi avoids economic dependence on external market forces that could make the village community vulnerable. It also avoids unnecessary, unhealthy, wasteful, and therefore environmentally destructive transportation. The village must build a strong economic base to satisfy most of its needs, and all members of the village community should give priority to local goods and services.” And from the same article: “Beyond a certain limit, economic growth becomes detrimental to human well-being. The modern worldview is that the more material goods you have, the better your life will be. But Gandhi said, "A certain degree of physical comfort is necessary but above a certain level it becomes a hindrance instead of a help; therefore the ideal of creating an unlimited number of wants and satisfying them, seems to be a delusion and a trap. The satisfaction of one's physical needs must come at a certain point to a dead stop before it degenerates into physical decadence.” Even further, from “Why the Village Movement?” by J.C. Kumarappa [Note: “In 1935, the India National Congress formed the All India Village Industries Association (AIVIA) for the development of (the) rural economy (in India), with Gandhiji as President and Kumarappa as Secretary and Organiser”]: “… every article in the bazaar has moral and spiritual values attached to it… hence it behooves us to enquire into the antecedents of every article we buy…. (Yet this) is an arduous task, and it becomes almost impossible for ordinary persons to undertake it when the article comes from far off countries. Therefore, it is that we have to restrict our purchase to articles made within our cognizance. This is the moral basis of Swadeshi.” (p. 72-73) “If we feel it is beyond us to guarantee the concomitant results of all our transactions, it necessarily follows that we must limit our transactions to a circle well within our control. This is the bed rock of swadeshi… The smaller the circumference, the more accurately can we guage the results of our actions, and (the) more conscientiously shall we be able to fulfill our obligations as trustees.” (p.79) To put forth a “get it right at the local level first” thinking does not mean we are trying to revert to the 18th century (or before) lifestyles, and abandon any of the most useful and beneficial advances in social, cultural, and technological fields. Here is how getting to that kind of thinking is framed in the “Tipping Point Action” proposal: a) “Collaborative problem solving processes can help citizens understand that the investments of time, energy, and money (the “votes”) each of us make in our everyday circumstances become the larger economy. And that wisely directed, such “votes” can result in countless ways of earning a living which contribute to the peacebuilding, community revitalization, and ecological sustainability efforts necessary to drastically reduce GGE (Greenhouse Gas Emissions), and minimize other related challenges. Citizens from every variety of circumstances can learn how to wisely cast such “votes”—through workshops and meetings at Neighborhood Learning Centers during a Community Visioning Initiative, and through other local learning experiences.” b) “If the goal is to resolve the unprecedented challenges ahead, then it would seem necessary to exponentially increase the number of actively engaged citizens—citizens who (thus) have a much more comprehensive sense of civic duty.” In this sense of “get it right at the local level first”, the people who have been pioneering in the fields of small scale farming, food sovereignty, ecovillages, permaculture, locally supported businesses, and creating sustainable habitats—as a response to the challenge of global warming/climate change—have been ahead of the curve the whole time. (The results of their trial-and-error experiments can provide many examples of a beneficial blend of “traditional” and “advanced” thinking and doing related to reducing Greenhouse Gas Emissions). Even so, since there is so much cultural diversity now, and a most significant majority of people who do not want to have anything to do with those kind of lifestyles, there has to be some kind of working out the issues without creating more problems than we already have. One of the reasons I advocate for Community Visioning Initiatives is because the more people who know just how difficult the issues are, the more there will be concessions to the advantages of habitat systems which are smaller and less complex, and easier to understand, as in The smaller the circumference, the more accurately can we guage the results of our actions, and (the) more conscientiously shall we be able to fulfill our obligations as trustees.” (p.79) Thus, (to get back to the subject of carbon tax and dividends) in tandem with the carbon tax and dividend efforts at the national level, I think similar efforts at the municipal level might do just as much along the lines of climate change awareness and the collaborative problem solving needed to arrive at solutions which do not lose sight of common sense. And—when there are successful carbon tax campaigns at the local level, the dividends (which were generated at the local level) can be more justly distributed locally, as part of local “crowdfunding” efforts to support a fair and just transition from a) patterns of investment which in only limited ways represent solution-oriented activity to patterns of investment which in many ways represent solution-oriented activity and b) dysfunctional systems which are very complex, to functional systems which are much less complex. Closing Comment From the article “Energy and Permaculture” by David Holmgren, co-creator of the “permaculture” concept) (article first written in 1990, published in “Permaculture Activist” Issue #31 May, 1994) (in “Energy and Permaculture” article, in section “Mollison”) (at http://www.permacultureactivist.net/articles/holmgren.htm )(confirmed November 1,2013) “The transition from an unsustainable fossil fuel-based economy back to a solar-based (agriculture and forestry) economy will involve the application of the embodied energy that we inherit from industrial culture. This embodied energy is contained within a vast array of things, infrastructure, cultural processes and ideas, mostly inappropriately configured for the “solar” economy. It is the task of our age to take this great wealth, reconfigure it, and apply it to the development of sustainable systems.”

Hi Gary, Thanks for your kind and helpful response to my comments about local carbon tax initiatives, and “get it right at the local level first” thinking—and for your additional explanations about the carbon tax dividend. I did see your personal message; however, my circumstances are such that my online computer time is limited. I was going to respond sooner, and refer you to my response to Peter, but I ran out of computer time. My approach in making comments or asking questions—here at the MIT Climate CoLab Platform—is just natural curiosity and willingness to share points of view and resources--with the goal of helping proposals I most understand, if I can be helpful. I believe I can be helpful to the clarity of proposals here at the Climate CoLab, if I offer sincere comments from my point of view. The same goes for other people making comments or asking questions about my proposal: I encourage comments and questions, as most times there is something helpful about learning what viewpoint others have about what I have said. [Note: There are many proposals which go beyond me to the extent that I don’t even know how to make a comment, or ask a relevant question—and that may be also be the case for many people who look at my proposal… (or they may wonder why I might believe something like that is practical—and “makes sense”.] It’s true: I have not done much research into various sides of the carbon tax issue. So I did find and read the 2 page “Legislative Proposal: Carbon Tax and Dividend” that I found at your Citizen Climate Lobby website (at http://citizensclimatelobby.org/wp-content/uploads/2014/04/Carbon-Fee-and-Dividend-April-2014.pdf ), and I found: “Whereas equal monthly dividends (or “rebates”) from carbon fees paid to every American household can help ensure that families and individuals can afford the energy they need during the transition to a greenhouse gas-free economy and the dividends will stimulate the economy….” And now [with other comments made by you and Peter, and having seen that “to help ensure… during the transition….”], I see clear connections to the synergistic possibility between my proposal and yours, and what you mean by: “community-based initiatives such as yours would present a possibility for community engagement and dialogue about how to invest the dividends locally” and “…every community has the freedom to create initiatives such as yours to recruit the use of those dividends in a manner most relevant to local needs”. (Note: I think it’s true: the more initiatives there are which either slow emissions or build positive and constructive alternatives, the more synergistic potential there is among all of them. I am beginning to see more and more potential for synergistic partnerships, among proposals at this MIT Climate CoLab, and among other organizations I already knew about.) I put forward the “getting it right at the local level first” thinking—and, in other comments, the elements of “reduce” and the issues of corruption and overindulgence—because I believe these are part of building alternatives which have the internal make-up to represent enduring habitat solutions. And we will need those kind of habitat solutions. However, I understand that there are practical and political complications which do require their own steps and strategies. Still, there are times when I think it’s right to bring up that there are points of philosophy and such which ought to be kept in sight… as in the final analysis, we have to end up with livelihoods that are carbon neutral (and carbon negative)—and it took a lot of being confused about the cardinal directions on our “moral compass” to get where we are. And here at the MIT Climate Colab Platform seems like one of those times and places to share what points of view and resources I have which I believe will be most helpful to accelerating effective solution-oriented activity, and building collaborations and partnerships between initiatives in related fields of activity. “…truths which none can be free to ignore….” Here is an extension of thoughts on the “points of philosophy and such which ought to be kept in sight...” which I believe is relevant here. Consider this quote: “… there are truths which none can be free to ignore, if one is to have that wisdom through which life can becomes useful. These are the truths concerning the structures of the good life and concerning the factual conditions by which it may be achieved….” [“General Education in a Free Society” (The Harvard Committee, 1945)] One question which I believe deserves to be given more thought than our public discourse is giving it now—and which I suggest be included in preliminary surveys which are given to 150 key local leaders (as part of building up to a Community Visioning Initiative)—is: 2. Definition of “the good life” What is your definition of “the good life?” Please describe your definition of “the good life”—including both those parts of “the good life” which you already have, and those parts of “the good life” which you still hope to attain—(and how you hope to attain them). [Note: Please clearly indicate which parts of “the good life” you already have, which parts you still hope to attain (and how you how to attain them).] In addition, I also believe in including, in the preliminary survey material, 3 or 4 samples of “a ranking of ten critical challenges of our time”. If my ranking was included, it would be the “List of Ten Critical Challenges” document in the “References” section of my proposal [Note: my website is currently down, but the key document “Invitation Package for Possible Board of Advisors” (589 pages) has this list, and that document can be found in other locations on the Internet. Additional Note: Appendix 2 of the “Invitation Package…” document is titled “15 Sample Preliminary Survey Questions” (11 pages).] When key local leaders put out their list of ten critical challenges, and with that they include their definition of “the good life” etc. and “how they hope to attain…”, such responses, juxtaposed with one another, can highlight the very “disconnects” which need to be addressed by collaborative problem solving. I believe it is likely that such preliminary surveys, if well thought out (with many open ended questions), would also highlight the many synergies which could be identified and supported by well organized Community Visioning Initiatives. Sometime during the collective efforts to resolve the global warming/climate change challenge (sometime in the next 40 years…?), I believe many people will be agreeable to referendums on the subject of “what is the good life?, and, given the multiple challenges we need to resolve in the next few generations, what are the factual conditions by which it may be achieved”? My guess is that such referendums will be most useful if they are done on a local community and regional basis (with questions that are open ended, so the collating of data can find many “gems” of local wisdom in the open ended answers). What we (humankind) have in the way of accumulated collective wisdom has come from many sources, and those sources have been located in many kinds of cultural, economic, and environmental circumstances. I believe our best chances to overcome unprecedented challenges come from harvesting wisdom from the widest diversity of sources.

Hmm. I was actually enjoying this Climate CoLab for say 20 minutes and then I stumbled on this. The clear leader in votes. Well, they put it best... "Lobby" is definitely the correct name for this group. They managed to lobby themselves into the lead and it reminds me of my fear of lobbyists in general. Nearly all of the comments are reflecting the same negative or confused sense I got when reading this choppy yet vacuous narrative. But worse is how they are kissing up to the judges by quoting two of them obviously in their proposal. This is an embarrassment and really makes me crave a down vote option.

Thanks for your thoughtful response. And no argument with creating relationships. That you appear to have done. A question: Is this line from your proposal factual or guesswork? "By appealing to partisan concerns, CFD has the best chance of passage." I see a lot of name dropping in CCL's work, and a lot of energized activity, but is there data on which proposal has the best chance of passage?

CCL - I'd appreciate your comments on the newly created proposal here, with more of a focus on political strategy. Thanks. https://www.climatecolab.org/web/guest/plans/-/plans/contestId/1300404/planId/1308401

I am all for the Citizens' Climate Lobby carbon fee with 100% deposited in the bank account of every U.S. Citizen. How might the fee be established so that it disrupts the U.S. economy as little as possible? Might the fee be instituted by the Federal Reserve at the same time they set U.S. interest rates? The Federal Reserve could be following U.S. economic indicators and attempt to disrupt the U.S economy as little as possible as the fee is instituted. If the fee is set every 2 weeks, there there will not be the step wise disruption of going from a $15/ton of CO2 to a $25/ton of CO2 at the end of the first year. Similarly, it would be good to have the fee steadily increased until it reaches $105/ton of CO2 at the end of 10 years. May you have great success in implementing a carbon fee with 100% dividend. Thanks, Bruce.

The idea of a Carbon Fee & Dividend (CF&D)system proposed by James Hansen is brilliant, but it should be rolled out WORLDWIDE: 1. It puts a fee on carbon at the point of extraction and has a transformative effect on the whole world economy. 2. Its proceeds would alleviate poverty worldwide 3. It would give an impulse worldwide to activities burying carbon like reforestation and biochar activities, giving impetus to small farmers worldwide to improve their habitat and stay on the land to produce food. A Carbon Fee & Dividend system is a system designed to charge steadily increasing fees on the carbon content of fossil fuels, oil, natural gas and coal, and return the proceeds back to the public. It is a mechanism designed to increasingly transform the world economy towards a more sustainable one using low CO2 emission forms of energy and therefore an important tool to avoid catastrophic climate change. The CF&D system does not apply to all greenhouse gas emissions. This first version could affect between 57-80% of all greenhouse gases (GHG) depending on its implementation. Why do we need a CF&D The atmosphere is increasingly being polluted by greenhouse gases warming up our planet and changing the climate. On all accounts of the IPCC, IEA, World Bank, IMF, the world is on track to warm by 3-8,5 degrees C this century if nothing is done about it. The effects will be nothing short of catastrophic for humanity and the living species it shares our Planet with. The UN has tried in several ways to put a break on emissions. The largest attempt was the 1997 Kyoto Protocol that introduced a system of cap and trade. It largely failed due to political unwillingness and complexity of the system. Annual emissions grew from the base line of 1990 to 2013 by about 50% and are still increasing. The policy goal held up by all countries is that we should not exceed 2 degrees C warming in order to not invite large scale catastrophe to humanity. Major climate scientists like Dr. James Hansen have warned that a 2 degree limit is already endangering humanity’s future and we should go back to 350 ppm CO2 in the atmosphere to be on the safe side. The CF&D system is a major instrument to reach the targets set to keep our climate and our planet safe for human habitation. What does a CF&D do? A CF&D introduces a fee on fossil fuels at the point of extraction or if that is not done at the point of entry into a country. By doing so, it increases the price of these fuels, increases that will be added to the price of the products made with the energy in the fossil fuels. This makes these products relatively more expensive compared to products made with energy that does not produce CO2 like hydro, wind, solar, thermal, biomass and nuclear or simply by increased energy efficiency. By increasing step by step the fee, a transition will take place towards products and services that hold a low fossil fuel content and the consumer will chose more and more the clean products and services, based on price. While prices of some products and services increase, others will remain stable. The fees collected shall be distributed equally over the adult population worldwide (organized per country). Consumers will be compensated for the higher prices and at the same time will save money if they use clean products and services. People who consume a lot and a lot of dirty products and services will pay more towards the system than people who don’t. Poor people will pay less because they have less to spend and at the same time they will receive an equal share of the fees, affecting them positively. Why does it need to be uniform and worldwide? Climate change is affecting the whole world and will do so increasingly. There are several reasons to introduce a worldwide and uniform system. Firstly, while China is the largest polluter, it is mainly because the rich countries (US, Canada, Europe, Japan, Australia, Singapore and some Middle Eastern Countries) basically have outsourced the production of industrially produced goods to China and other Asian countries. The pollution created in China, is ‘’on behalf of’’ the consumers. Meanwhile large oil producers like Saudi Arabia or Nigeria have a relatively small direct footprint of CO2 emissions, but they are the source of the fossil fuels that will be responsible for new greenhouse gas emissions. Secondly, historically greenhouse gases have been pumped into the atmosphere by the earlier industrialized countries and there is where most of the richer end consumers live. A global uniform CF&D system is correcting that up to a point. Thirdly, a lot of studies have shown that the poor, who are the least to blame for CO2 emissions, are the ones who will suffer more and earlier the consequences. A global, uniform CF&D system rectifies that problem to a degree and with carbon fees high enough, would also directly alleviate extreme poverty worldwide as the amounts coming from the dividend is spread worldwide equally over all adults. It might invisibly small to the rich, a nice bonus for the middle classes, but it will be important income to the poor. If the system is implemented by a the large economies, like the US, the EU and Japan and some will not abide by it, fees on fossil fuels can also be established at port of entry (mainly harbors) as well as a tax on products produced in non-complying countries. This way compliance can be enforced around the world. Economic effects & effects on climate change The economic effects will be visible very fast without being a drain on the economy as the pace of the fee increase will be decided on established indicators of economics and development of emissions. But the first big effect will be on investment and divestment. Just the introduction of the CF&D system will increase investments in renewable and low emission energy production and it will produce a divestment away from the fossil fuel industry. The same goes for clean transport (electric cars powered by renewable electricity will be given more and more a head start, while smaller fuel efficient cars will more and more win out over fuel guzzlers, etc.) Airplane tickets will increase sharply in price, diminishing flying around the world in favor of high speed railways etc. The CF&D system could be extended to fees for deforestation and cement production, two major GHG emitters. It will also allow for negative fees (so money back) for economic activity that bury carbon and therefore capture greenhouse gases. Examples could be large reforestation projects, biochar projects, waste-management and carbon capture and storage installations. The effects on emissions will be fast and the steeper the fee, the steeper the emission cuts. Parameters maybe also be based on the amount of CO2 in the atmosphere in parts per million or the increase thereof could be coupled with the fee level. Implementation Fossil fuels are produced by a small number of companies, producing from a relatively small number of extraction points and fossil fuels get shipped across borders at a relatively small number of points of entry. Most countries have VAT systems working, allowing them to implement a fee and payment system relatively easy into existing systems. Fees will be collected per country and distributed over the adult population (from 18 years of age) based one worldwide figure, e.g. 15 US dollar per month per person (which is realistic at a 10 USD fee per barrel of oil equivalent). Children are not counted to avoid a baby boom under the very poor just to collect the fee. Some countries will collect much more fees than others relative to their adult population. These excess fees will be shipped to an international CF&D bank, which is responsible for matching the proceeds of different countries. The CF&D system will also allow for negative fees (so money back) for economic activity that bury carbon and therefore capture greenhouse gases. Examples could be large reforestation projects, biochar projects and carbon capture and storage installations. Research into agricultural practices that are storing carbon (e.g. topsoil enhancing forms of agriculture) needs to be carried out. A scientific and technical committee will need to produce guidelines for all the fees, based on scientific research. With fossil fuels these factors are well known, with negative fee projects work needs to be done. Also fossil fuels used to produce non greenhouse gas emitting products (like plastics or paints) need to be exempt from fees. The dividend distribution system needs more work as all adults need to have access to a bank account or other money system (mobile phone, internet profile etc.) to receive the fees. More than 2 billion people do not have access to a bank account or payment system, which is in itself a factor that is keeping the poor poor. The World Bank launched the Global Financial Inclusion initiative, which it calls Global Findex. Inclusion of all adults could be organized led by the World Bank. The system must be all inclusive, but individuals would be able to opt out. Some rough calculations The following figures are rough estimates based on some quick online research and are meant to understand as ball park figures. Total emissions per annum 33,3 Gigatons of CO2 in 2011, up from 22 GT in 1990. (for more detail per country see http://edgar.jrc.ec.europa.eu/overview.php?v=CO2ts1990-2011 or http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions) Amount of CO2 in the atmosphere in parts per million 400 in 2014, up from about 285 ppm at the start of the industrial revolution (1830) Total maximum emissions for the planetary surface temperature to keep below 2 degrees C Estimates are around 500 Gt, which would be less then fifteen years before we need to be carbon neutral, given that emissions are at 35 Gt per annum in 2014 and rising. A good blog about this subject is: http://www.theguardian.com/environment/georgemonbiot/2009/may/06/carbon-emissions A good course for details is the Global Carbon Budget http://www.globalcarbonproject.org/carbonbudget/13/hl-full.htm#summary Total world energy production 2012: 13100 MTOE (Million ton of oil equivalent) Total energy production from fossil fuels: 81.6% or 10700 MTOE, or around 75 billion barrels of oil equivalent. Source: IEA Key World Energy Statistics http://www.iea.org/publications/freepublications/publication/KeyWorld2013.pdf Total adult population: 4 billion Total proceeds of carbon fees per annum based on 10, 20, 50 and 100 usd per barrel of oil equivalent of fossil fuel based on 2012 production. At 10 USD = 750 billion USD, 20 USD = 1,5 trillion USD, 50 USD = 3,75 trillion USD, 100 USD = 7,5 trillion USD Dividend per person based on fees of 10, 20, 50 and 100 usd per barrel of oil equivalent of fossil fuel based on 2012 production. At 10 USD = 187,50 USD per person per year, at 20 USD = 375 USD pppy USD, at 50 USD = around 900 USD pppy and at 100 USD = around 1900 USD per person per year. There figures do not include activities which will receive carbon fees because they bury carbon, or proceeds from deforestation and cement production. Here is the original paper by the James Hansen, but it applies to the USA only: http://www.columbia.edu/~jeh1/mailings/2010/20100425_PeoplesBill.pdf

Robdalaet, Thanks for the detailed post. We certainly agree that the beauty of CFD is that it can be applied anywhere and have roughly the same effect. Implementing this in the US would have a significant effect on how other countries address the issue because the US is such a large importer. Placing border fees on imports not subject to a carbon fee will induce other nations to adopt similar policies. However, 80% of all known fossil fuel reserves lie in the hands of sovereign nations, not publicly traded companies. This will be a very significant obstacle to global implementation because they view these reserves as their ticket to western-style development and lifestyle. Should they adopt CFD and dole out the fees to every citizen rather than pursue state-controlled (and corrupt) development? Do we have an answer for that? Not yet, I'm afraid.

I happily have voted for the Fee and Dividend proposal. It is so logical. Another logical proposal is the one I have posted in another category that is complementary, and certainly not in any way competitive. I would really appreciate your comments and a vote. It is Climate Change is Elementary in the Youth Action category and it can be found at: https://www.climatecolab.org/web/guest/plans/-/plans/contestId/1300901/planId/1307405 Thanks in advance for your suggestions to make it work for every school and every vendor. After we have a carbon Fee we still need a way to rapidly make the transition to renewables, and I believe that our GreenActionCard can greatly accelerate the inevitable changes. Thanks

I am so glad to see CCL in this contest, not only for the benefit of the infusion of cash that the prize money could do to further the cause, but even more importantly, to engage this entire forum of (mostly) like-minded people that are (supposedly) equally concerned about the same goal, i.e. reducing carbon emissions. Let all those who feel the need to break up the carbon fee into so many sundry (worthy) causes donate their OWN dividend to such causes. Let's see how philanthropic they feel when they receive their own dividend. I, for one, believe the most effective use of those funds is to invest every dollar of them in renewable energy, such as growing the size of a solar array on my roof each time a check comes in. Isn't that the exact same thing that a carbon fee will cause the large energy companies to do, on a much larger scale? Germany is accomplishing it on an individual basis, with massive results, through their Feed-in-Tarrif program. One day last month (june 2014) over 50% of the electricity produced in Germany was SOLAR derived. That's the power of allowing market forces to give people incentive to use clean energy. I believe that Carbon Fee and Dividend will accomplish the same goal, only more effectively, and more rapidly. I also see that it will have a trickle-down effect with our trading partners, which Germany's F.I.T. program didn't accomplish.

Great writeup! I referenced it in a combined proposal under Global Plan: https://www.climatecolab.org/web/guest/plans/-/plans/contestId/1300701/planId/1309401 Also linked it from my Basic Carbon and Carbon Income proposals, which are also part of the combined plan. The basic idea for these is to set a high fee and use the dividends as "basic income," since people below average emissions would profit.

Judging: 1. Very detailed economic numbers can be found in the REMI report: http://citizensclimatelobby.org/wp-content/uploads/2014/06/REMI-carbon-tax-report-62141.pdf The study breaks out the effects of the CFD on the nine regions of the US established by the US Census Bureau. The charm of the CF being imposed on the source of the carbon is that there are a very limited set of companies involved in fossil fuel extraction. These companies already file regular reports on how much material they have extracted, in large part for the tax credits they provide. Applying an appropriate charge per unit of material reported will be relatively simple. Large foreign emitters are not directly affected by this fee, but products from those countries will be covered by a border adjustment fee, which is intended to level the carbon playing field and discourage US firms from relocating production facilities overseas to escape higher carbon-based material costs. 3. Under this proposal, no companies (US or otherwise) get rebates - only individuals.

Overall, the proposal would benefit from more attention on how to manage the politics of policy enactment. There is an assumption that, by giving a dividend, a public constituency will naturally emerge that can overcome special interests. Would also like more on how the proposal might recruit Republican constituencies who might be otherwise reticent about a new tax. More development on the political and administrative issues associated with the implementation of a cap and dividend approach. Finally, more transparency and information on the modelling, which may be a bit optimistic.

good idea....profits could go to greenpeace, climatecolad AND NEW ENERGY START-UPS, big companies will not changes fast enough, I remember from univ, they have rigid core values! My question to you: What will protect the public from these assholes raising fuel prices trough the roof?? they will make even more profits thanks to your tax....

Although this proposal is for the United States of America - it will have profound effects in Canada because our energy and climate policies are de facto linked. A predictable price on carbon pollution will slow down development in the Canadian tarsands and keep the "carbon bomb" in the ground. The first rule of a warrior is to prevent war. World War IV - The Carbon War- has a much greater chance of being stopped with Carbon Fee and Dividend. Carbon Fee and Dividend will protect our climate, air, water, and economy - and when it goes global, there will be CARBON FEE PROSPERITY for all! I want to extend a big thanks to Gary, Joe, Peter and Liz for the incredible proposal. To Marshall for his vision and generosity; Mark Reynolds for his empowering CCL teleconference calls and Amy, Susan, Steve, Olivia, Sarah, Lynate, Elli, Ricky and others who help at the international office for all the support; and all the CCL group leaders across this planet for their unconditional giving. Go Little Engine that Could! Cathy Orlando, National Manager Citizens' Climate Lobby

There is one fallacy that has been mentioned here: that fossil fuels in their natural state have intrinsic value. They do not. Coal that is underground where no mine exists has no value. The only value comes from the labor expended to build a mine, dig out the coal, crush it, wash it, and ship it to the power plant. There is no 'sunk cost' in fossil fuels in their virgin state because no one 'built' them. The real sunk cost is in all the infrastructure that I just mentioned. So any calculation of how much the fossil fuel investors might be paid off should be based on the mines, wells, rail cars, refineries, etc. that were actually built.

Regarding the cost to consumers, the best answer I can give you is that last week I listened to a lecture on the impact of a carbon tax by Jordan Wilkerson (http://web.stanford.edu/~wilkejt1/Documents/Wilkerson-Jordan-Resume.pdf) whose results, based on government methodologies to calculate energy usage in 9 different geographical regions of the country, indicate that in every region consumers come out ahead with the dividend, some more or less depending on energy mix, but none suffer. Gary Horvitz

Thanks for your efforts. I have a couple of questions: 1. Through which channels/mechanisms will the revenues be returned? And will only individuals or also businesses share in the redistribution of revenues independent of consumption? Since businesses also end up contributing, shouldn't they also share in the redistributions? In Switzerland, we launched a hybrid incentive tax in 2008 (2/3 of revenue redistributed, 1/3 used for a federal/cantonal building retrofit program and a technology fund). The redistribution to individuals is done through credits on health insurance premiums and to businesses via credits on social security contributions. Current level is roughly $65/t CO2. 2. How do you foresee such a national system interacting with pioneering State policies that are already up and running (e.g., California Climate Credit, Cap & Trade)? 3. I agree with others that the issue of trade-related aspects will be fundamental to success. Can you elaborate more on the plan to address the level playing field issue? For example, if a country like China or the EU has a cap & trade scheme or tax (or other policy) that puts a price on carbon, how will that be taken into account? This issue of establishing equivalence across different types of systems is complex and highly political. And we, as Americans, have to keep in mind that what might make sense in the USA might not in another country (see further observations below). Someone commented on the fact that we cannot combust the known fossil fuel reserves (coal, oil and gas) and allow that CO2 into the atmosphere, if we are to maintain a livable climate/planet. Just wanted to highlight a couple of things: 1. Coal. The main use of coal in the USA is electricity generation. Regulators in some states (incl. CA) have largely decided to decouple utility profits from electricity sales, specified a loading order, established renewable portfolio standards, and provided incentives to utilities to achieve energy saving targets. Such utility regulatory frameworks can reduce coal demand significantly, as has been demonstrated in CA. However, WY is the major producing state, and exports are increasing. We need to focus on the key interests, which in this case are quite narrow in the context of the overall US economy. 2. Oil & Gas. Could the same regulatory concepts applied to the utility sector (decoupling, RE and EE portfolio standards...) be successfully applied to the oil & gas sector? A big challenge (or opportunity, depending on how you look at it) from a global perspective is that governments have ownership of >70% of oil and gas reserves (and control half of global electricity generating capacity = coal)...

Anne, thanks for your detailed post. 1. As stated in the proposal, individuals receive dividends, not businesses. Businesses are not taxed unless they are directly introducing carbon into the economy. Households are compensated primarily through electronic fund transfers from the Social Security Admin, the IRS or the treasury. 2. A carbon tax does not subvert or complicate any local legislation such as CA AB32. A REMI study was done for the state of CA and found that the CFAD enhances AB32 and will do likewise with other measures such a renewable energy standards for utilities. 3. Tough--and relevant-- question. I've heard this before and your points are all correct. I do not have an answer. As for your other points, yes, a carbon fee does primarily spell doom for coal. And coal-related jobs have already dropped significantly in recent years, now down to 80,000, less than the number of solar workers now. But I don't think anyone wishes to ignore them. The only way to have an effect on sovereign-owned resources is to put a price on them at the border. That, coupled with a cap such as in Chris Von Hollen's congressional legislation, would induce a diversification of those economies. Although, for example, inducing Venezuela, currently in the hands of shamelessly corrupt and incompetent kleptocrats, to use their revenues more wisely might be a lost cause.

A concern about the impact on government budgets: The budgets of US governments (Federal and State) must provide for purchases of energy (electricity, heating, vehicles). Through its Dividend mechanism, the proposal helps make Individuals "whole". (Although individuals will face higher prices for energy, the Dividend helps them deal with the higher expense.) But Governments do not receive a cut of the Dividend. Therefore, won't governments, many already underfunded, be pushed deeper into debt?

To: The Climate CoLab Community and Judges From: The Little Engine That Could Team This is our response to the last round of judges’ comments. We hope it illuminates aspects of our proposal precluded by prior space limitations. 1. “Overall, the proposal would benefit from more attention on how to manage the politics of policy enactment.” Members of Congress are not recruited by an idea. Rather, they join coalitions that provide opportunities to take the kinds of action that are meaningful to them and their constituents. This is why 7,000 citizen volunteers are working to build constructive working relationships, based on mutual respect and appreciation, with their members of Congress and their staffs, of all political parties. This is possible because both CCL and CFD are nonpartisan. Rejecting cynicism and despair, Citizens’ Climate Lobby (CCL) is building an organization dedicated to creating political will for CFD. CCL is a 5-year old, nonpartisan, rapidly-growing network of more than 7,000 volunteers who are training, collaborating and working every day to build political will for this solution. There is an always-on coordinated effort of organizing, lobby meetings and press activity that has moved the debate dramatically over the last 5 years. CCL empowers individuals to find their voice in the climate debate. We provide tool kits for direct lobbying of local and national elected representatives, create focused actions that expand members’ personal political power, train them in placement of public comments in print media, build relationships with editorial boards, and organize at a grassroots level to build consensus. Monthly conference calls with top-level speakers educate citizen lobbyists on the issues. CCL also engages economists, military leaders, tax centers, and both progressive and conservative think tanks. CCL has met with faith leaders, including the Vatican and Evangelicals to explore taking fiscal responsibility for stewardship of Creation. The present proposal is one example of CCL’s ability to empower individuals to take action. Since January 2013, CCL volunteers have conducted nearly 1,500 meetings with their representatives in the House and Senate. They are now publishing on average 1 op-ed and more than 6 letters to the editor every day in US newspapers. Every major piece of proposed carbon pricing legislation now includes elements of CCL’s Fee and Dividend plan. 2. “There is an assumption that, by giving a dividend, a public constituency will naturally emerge that can overcome special interests.” Some may assume that the promise of a dividend is how CCL intends to build political will. Neither Citizens’ Climate Lobby nor the authors of this proposal advocate any such thing. The dividend is not in the legislation in order to buy public support, but because it is the most transparent and immediate way to correct the underlying market failure -- the unseen externalization of business costs from the carbon-fuel industry -- to the rest of society. By making sure the dollars start with consumers, businesses have to compete to earn them by becoming more efficient with respect to carbon intensity. The dividend is the lever of economic change, not just a pay off to generate spontaneous public support, although over time that will happen. The full dividend is also the means to make room for opponents of climate action or carbon taxes to come to the table and support a plan that works. We are not asserting that a public constituency alone will necessarily overcome special interests, nor can we speak to exactly what influence those interests might ultimately have on the process and precise features of legislation. But there is no other organization better positioned or more capable of promoting the message that the fee and dividend is a win for the economy, the environment and for people. 3. “Would also like more on how the proposal might recruit Republican constituencies who might be otherwise be reticent about a new tax.” As stated to us by George P. Shultz, Republican former Secretary of both the Treasury and State Departments under Presidents Nixon and Reagan and a member of our advisory panel, the carbon fee isn’t a tax if the government doesn’t keep the money. It’s a mechanism to influence markets, analogous to the Fed’s interest rate adjustments, aimed at the dangerous distortions undermining the economy and threatening civilization. Locking up the revenues in an iron-clad Trust Fund, rigorously sequestered from the general budget, can assuage appropriately skeptical citizens that the money will be properly accounted for and returned to deserving parties. The United States Treasury, IRS and SSA have adequate records of managing funds responsibly. Many members of Congress have pledged not to vote for any “new taxes.” That pledge is specifically about raising new revenues and/or funding new bureaucracy. The Fee and Dividend plan provides zero dollars to government and requires no new bureaucracy. It adds no new regulatory procedures of any kind. It is 100% revenue-neutral, so anyone who has promised not to raise taxes, increase spending, build new bureaucracy or add regulations can support it. Our plan applies the fee upstream and the dividend goes directly downstream to households, thus our solution spans the entire marketplace, making it the arena in which competition will drive the transition to smarter, more efficient energy supply practices. Since the result would be an increased flow of consumer dollars through the Main Street economy, CFD not only lets the market go to work to fix our climate-energy crisis, it does so by building value for families and small businesses in a way that makes our entire economy more resilient, more efficient and more productive. Also, though it’s not part of the CCL Fee and Dividend proposal, the fact that it would expand overall economic activity means that, while maintaining the 100% dividend and strict revenue neutrality, the additional GDP could make it possible for Congress to consider reducing rates on other taxes without incurring the risk inherent in using the carbon fee itself to reduce other taxes. That risk is the eventual successful elimination of the source of the revenue as the program succeeds in reducing use of carbon-based fuels, causing the emergence of deficits. Fee and Dividend is favored by some Republicans (see links in Actions: It’s Conservative) precisely because it achieves what they seek: a solution that lets the market do the work, that doesn’t add regulation, doesn’t add bureaucracy, doesn’t increase revenues or spending on government programs, which doesn’t pick winners and losers and which will grow the economy, create jobs, and make the overall economy more efficient. Wherever there are doubts or concerns about this, CCL volunteers are available to get into the details of these questions, go through the conservative economic modeling that has found these benefits flowing from CFD and build awareness of the local interest in taking this approach, among both progressives and conservatives. 4. “More development on the political and administrative issues associated with the implementation of a cap and dividend approach.” We are not advocating Cap and Dividend. Fee and Dividend is a non-regulatory policy that differs from cap and dividend in important ways. Cap and Dividend is essentially Cap and Trade with a Dividend component. It can be made to have a narrow focus (power plants only, with monitoring of emissions) or to cover more sources of carbon emissions (permits sold to those who wish to supply the fuel itself, so the price is applied upstream). The permitting and trading processes both require strict regulatory frameworks that don’t yet exist and need to be structured carefully to avoid incentivizing carbon leakage. That process is subject to political favors and speculation. Being less vulnerable to volatility or to interference, CFD is less favored by interests profiting from uncertainty. Fee and Dividend is more straightforward. All of the bureaucracy and administrative functionality required for Fee and Dividend already exists. The Fee is applied at the source of the fuel, or where it first enters our economy; the Dividend returns 100% of the revenues directly to households, and the predictable rate schedule of the Fee is not dependent on secondary or abstract market activity (as with permit trading). Thus it sends a clear and steady signal to investors and planners, allowing them to chart an optimal trajectory for the switching of investments from artificially cheap fossil fuel operations to more efficient clean energy technologies, at a rate that makes the most sense for them. Politically, achieving consensus is a question of getting politicians with very different views on taxes, climate and economics to talk to each other and find common ground in this approach. Wherever possible, CCL volunteers are working to facilitate that collaborative reconnection among their elected representatives. Globally, the power of the carbon fee approach is its systemic impact, unlike the current US regulatory approach. As the dialogue advances and the concept of pricing carbon becomes the central discussion, the preferability of a global approach with a carbon fee versus cap and trade will become increasingly evident. In many countries there are severe obstacles to establishment of an effective cap and trade arrangement. Cap and trade inherently creates opportunity for rent seeking (i.e.corrupt practices -- see Nordhaus, The Climate Casino). The complexity, opacity and administrative-political discretion of cap and trade in emerging countries with significant CO2 emissions and weak institutions lead to a conclusion that the carbon fee is the more achievable and effective: Two of the stronger institutional bodies in most countries are tax systems and import tariff administration. Both are in place; both have international oversight from the International Monetary Fund and the World Trade Organization.  The carbon fee initiative does not depend upon achievement of a broad international treaty.  A protocol among just the U.S., Europe and China would send a major signal that a harmonized carbon fee would be in the interests of all.   Lastly, inherent in the carbon fee is the carrot and stick of the border adjustment, which provides the greatest assurance that effective CO2 action -- a carbon fee -- will be adopted by other countries.  5. “Finally, more transparency and information on the modeling, which may be a bit optimistic.” The modeling REMI conducted to assess the macroeconomic value of a Fee and Dividend plan is inherently conservative, both in its methodology and results. First, by not counting the compounded and accelerating costs of nonlinear impacts from unprecedented climate disruption as negative values in the Baseline scenario (with no change in existing policy), the Baseline scenario shows an economy that appears to be far more efficient than it actually is -- or will be. This amounts to giving the benefit of the doubt to those who worry we cannot accurately quantify nonlinear planet-wide climate impacts and that we are “doing the best we can” in our current model. Second, by not counting climate impacts as costs in the Baseline, the study also forgoes adding in the benefits that come with “averting climate impacts” in the Alternative scenario (with Fee and Dividend implemented). The net loss of optimistic outcomes from forgoing both of these value calculations is significant. The result is that REMI’s modeling is much more conservative, not optimistic than it might otherwise be. Third, REMI used three models for tracking the impact of changes to the cost of energy, all of which use economic history, not theoretical speculation, as their guiding framework. For instance, we know that if people have 50 extra dollars, there are certain kinds of activities that see the greatest boost; if they have 100 extra dollars, some of these still see a boost, but so do other activities. REMI’s modeling allows for this kind of analysis across 160 sectors of the US economy. Fourth, by relying on existing Department of Energy data sets and models (ReEDS and NEMS) for the efficiency and cost-efficacy of various sources of energy, the study forgoes adding the efficiency value of cutting-edge clean energy technologies that are only now emerging and beginning to make their way into the consumer marketplace. Emerging disruptive technologies are not counted in the evaluation of how much total value will flow to and through emerging clean energy sectors because we don’t know enough about how they will interact with the economy to reliably model. This introduces even more conservatism into the model. The result is that REMI’s findings are not aggressive or optimistic in the direction of total new economic efficiency, total new value added, total new job creation, wealth creation or elimination of climate-borne market distortions. The study was structured specifically to ensure unbiased, data-driven results, tested against existing known economic reality. The entire methodology is outlined in the study itself. The full study can be downloaded at http://www.citizensclimatelobby.org/remi  Respectfully, Peter Joseph Gary Horvitz Joseph Robertson Elizabeth Fisher

Having just read the last bit, one last comment: SCOUR the text to remove the potential for it to appear partisan...the power of CCL's tax and dividend (as supported by REMI's report) is the potential to be non-partisan...the potential to bring all into the fold while allowing all to stick to fundamental principles. Any language that appears to point fingers at reasons for inaction thus far risks that inclusion. I love CCL b/c - in addition to its singular focus on a beautifully transparent revenue neutral carbon tax - it is adamant about demonizing no person, group or organization. What has passed until now is the past. We need to focus on the future and unless we are truly inclusive in this proposition, we undermine its chances.

Pleased to see this effort in communicating CF&D. Well done. 1. Getting a congressional approval of Carbon Fee & Dividend could be an insurmountable hurdle. Perhaps the upcoming Climate March in New York will promote congressional thought and action. 2. I hope we are thinking about other means of communicating our proposal. A mass mailing comes to mind, even though it would be expensive. Letters to the Editor are somewhat effective, but many go unread. 3. The arithmetic of the calculation of potential CO2 with, perhaps, an example, might help to convey the method of fee determination. 4. Some people believe CCL is out to shut down the petroleum and coal industries. Perhaps a comment regarding this misunderstanding would be helpful.

To Campbellonharker Re: "3. The arithmetic of the calculation of potential CO2 with, perhaps, an example, might help to convey the method of fee determination." I think you are asking for an illustration of what the cost of the tax on specific products will look like to the consumer. In the transportation sector, here's what it looks like: A Gallon of Gasoline is chemically transformed into about 20 Pounds of CO2 when burned. The CCL carbon fee starts at $15/Ton CO2. 1 Gallon gas -> 20 pounds of CO2 = 1% of a ton of CO2. So the fee when initially implemented will translate into a price increase of (1% x $15) = 15 Cents per Gallon. (Rule of thumb for gasoline, $1/ton CO2 = 1 Cent/gallon of gas.) Going out to year 10, the fee will have gradually risen to $105/T CO2 = $1.05/ Gal of gas. This is not so high as to bring the economy to its knees, but it is high enough to get people to seriously consider buying a plug-in vehicle next time they're in the car market. I hope this helps.

THIS WOULD BE A WIN FOR CANADA AND THE USA: A Canadian perspective If the USA gets a revenue-neutral carbon tax that sets the stage for Canada to do the same and vice-versa. In 2010, Canada and the USA signed the weak and non-binding Copenhagen Accord to reduce greenhouse gas emissions. Currently, Canada is not on track to meet this international commitment. Even though the Minister of the Environment is on record indicating that the Canadian government is going to fulfill our non-binding commitment in the Copenhagen Accord, details have not been forthcoming. Canada's biggest trading partner, the USA, never signed the Kyoto protocol and this is probably one of the key reasons why the Harper Government withdrew from the Kyoto Protocol. The main economic tool for mitigating global greenhouse gas emissions in the Kyoto Protocol was the carbon pricing mechanism cap and trade with offsets – a carbon pricing mechanism repeatedly rejected by the American people and the US Congress. Canada can lead by example and we don’t need to use cap and trade with offsets. Carbon fee and dividend is the simpler approach for all North Americans: implementing a steadily-rising fee on carbon-based fuels that returns revenue to households. BORDER TARIFFS By including border tariffs on goods from nations that lack an equivalent price on carbon, we provide a strong economic incentive for other nations to follow that lead –including our biggest trading partner – the USA. NAFTA Clauses in the North American Free Trade Agreement (NAFTA) provides for the highest environmental protection. As well, under NAFTA Article 604: Export Taxes, parties are allowed to maintain duties, taxes or other charge on the export of any energy or basic petrochemical good to the territory of another Party if the duty, tax or other charge applies to the exports of any such good to the territory of all other Parties and any such good when destined for domestic consumption. The REMI-data points to taxing carbon and not our income is the best way forward in the USA. Canadian data also suggest a revenue neutral carbon tax would work in Canada too. INTERNATIONAL MONETARY FUND In July 2014, the International Monetary Fund (IMF), released a report calling on Canada to raise carbon taxes and cut income taxes. The IMF study determined that a carbon tax internalizing the real cost of fossil fuels (pricing-in pollution, etc) will increase Canada’s gross domestic product by 1.4%, reduce carbon emissions by 15% and diminish deaths from air pollution by 25 per cent. http://www.imf.org/external/np/fad/environ/pdf/c1.pdf http://business.financialpost.com/2014/07/31/imf-to-canada-and-other-countries-raise-energy-taxes-cut-income-taxes-to-boost-economy/ BC CARBON TAX DATA Canada has a domestic success story with regards to carbon taxes too. A Canadian study using Statistics Canada data found that after five years that British Columbia’s (BC) carbon tax has been successful in reducing greenhouse gas emissions, growing the BC economy and reducing personal income tax for British Columbians. http://www.theglobeandmail.com/globe-debate/the-insidious-truth-about-bcs-carbon-tax-it-works/article19512237/ I have been a member of the Climate CoLab since spring 2010. I proudly support the Carbon Fee and Dividend proposal ... It is the way forward for Canada and the USA.

1. As the ultimate goal is to reduce GHG emissions, the behavior of the consumer is a key factor. If the cost of gas increases but the consumer knows they are getting a dividend in return I am not sure it will have any impact on their use of hydrocarbons? Customers don’t care what something costs if they see it as being paid for by someone else…..have you studied this impact in some way? Do you have any studies by economists to support the beneficial impact on consumer behavior?

Lime617: The economic incentive of the dividend will not merely be to pay the increased costs of energy, it will be to reduce those costs even as the dividend rises. Why should anyone simply continue to pay for gasoline with a government check if there was a way to come out ahead by using less gasoline or less home heating oil or by buying products that cost less because they are produced using cheaper sources of energy? I don't think we need any studies to determine the answer to that question. It's a natural rational self-interested response: the foundation of modern economic theory.

Congratulations!!! Please check the "Discusion Section" in the "Community" label... Proposal of activity during the Conference Session of 2014 Winners... https://www.climatecolab.org/web/guest/discussion#discussion%3DpageType%3ATHREAD%2CthreadId%3A1337218

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Hi MrDave Thanks for the comment. You're right, Alaska is a great example and it even has the support of Sarah Palin! Also, good point on where the tax burden would rest. It seems we have agreement with some conservatives on a "revenue neutral carbon tax" but their "revenue neutral" goes as you've listed and does become a tax burden to the poor whereas the dividend to all is also "revenue neutral" but better for the whole economy, including the poor. We can no longer change our Co-lab entry to add your points but we are working now on getting attention to the independent economic analysis of our proposal that we had done by REMI. The report is here: http://dv7gcmvxe5e8l.cloudfront.net/wp-content/uploads/2014/09/The-Economic-Climate-Fiscal-Power-and-Demographic-Impact-of-a-National-Fee-and-Dividend-Carbon-Tax-6.9.14.pdf Here's a one-hour presentation by one of the authors on the highlights of the report...he's a good presenter. it's not boring (at least I don't think it is). Sometimes he's funny. http://www.remi.com/remi-economist-scott-nystrom-speaks-at-ccl-conference Thanks for your support!

I am a member of CCL. RMCFD is brilliant and is the tide that would lift many boats: public transportation, local produce, car pooling, organic farming, solar/wind power, home insulation, energy efficiency, etc. all of which avoid burning carbon and would lower emissions. It is simple, elegant and powerful. Another benefit: consider that the hidden costs of coal are estimated at $300-$500 billion per year. Harvard School of Medicine: True Cost of Coal http://www.nexteraenergycanada.com/pdf/durham/PIC_2_Handouts_P1.pdf Consider those costs another ‘dividend’ as coal use diminishes. I do, however, have two questions. One, the REMI study predicts that CFD would lower emissions by about 50% in 20 years. On what basis is that prediction? How confident can we be of that reduction in emissions? Two: We have been pitching CFD in Congress, so many legislators in Congress are well aware of the REMI study that demonstrates the enormous benefits of CFD, yet I have seen little indication of support (well, perhaps, privately). Pretty much only Bob Inglis, so far. Heroes are rare. If only a minority of delayers/deniers feel the moral/ethical imperatives of AGW and the beauty of CFD, breaks ranks with colleagues and risks their political career, that won’t get it done. I do not see evidence that this Congress, or one similar, will go along in sufficient numbers with a plan that would take market share from their political benefactors. Can we afford to wait for Amazing Grace? Perhaps or perhaps not. Because there is no Planet B, we need a Political Plan B. Fossil Fuel interests will ‘invest’ a billion dollars in keeping friendly faces in Congress. Let’s fight fire with fire. We are the Amazing Grace we need. This just in: Apple, Goldman Among Companies in $140 Billion Climate Pledge Bloomberg - Executives from 13 major U.S. corporations will announce Monday at least $140 billion in new investments to decrease their carbon footprints as part of a White House initiative to recruit private commitments ahead of a United Nations climate-change summit later this year in Paris. How about convincing these players to use TWO billion of that for political purposes? That is the leverage we need. There are other major players, such as Ceres, who could also pitch in. Ceres cares deeply about saving the planet and has, I think, $24 Trillion in assets. Where is the Godzilla we need against King Kong?

A fee and dividend carbon tax would divert more money into the pockets of those with smaller carbon footprints who presumably consume less because they have less money to spend. Giving more money to people who live paycheck to paycheck would stimulate the economy. Sales of products that require less energy to produce, distribute and use would increase, while sales of more expensive high-energy products would decrease, causing a shift to a robust clean-energy economy.

It is a great work! I will like to know if this is possible in other regions thanks.

The region i mean is Africa because in Nigeria the oil and gas firms (petroleum industries are still flaring oil and gas)which the carbon is contributing to climate change.

I'm really concerned. I voted for this proposal and have joined Citizen's Climate Lobby to work towards its enactment. Citizen's Climate Lobby originated 7 years ago. About the same time that British Columbia enacted their carbon tax. We still don't have anything approaching that in place. We are running out of time. The price of oil on the world market continues to drop meaning increased availability and consumption with less incentive to make the switch to renewables. Climate change is opening up even more access to oil north of Russia, Canada and Alaska. Increased supply will continue to keep prices low. The only good thing about the lower price of oil is now, if we could somehow get the carbon fee and dividend enacted, would be a good time to start as there would be less public opposition to a fee.

I am an ardent supporter and thank you for the excellent work here.

Would someone from your Team take a look at my Proposal in the US Climate Plan 'Overcome the Inertia of Denial'. The pitch.....'the first step in solving any Problem is recognizing there is one'. Will McAvoy

A price on carbon is the best hope we have presently. First though, we have to give intense recognition of the severity and most importantly, the reality of our impact.

 

1. The questions of lime617 were never addressed--why will we buy less fossil fuels by taxing those fuels and then refunding the same tax back to us? Anyone with an average fuel usage would get a dividend check equal to the tax they paid. It's like knowing that the fee for a speeding ticket would be refunding to me. How will that change any behaviors? Anyone with less-than-average fuel usage would actually get a lower cost of fossil fuels. No wonder Big Oil favors this system for carbon pricing. Wake up, CCL!

2. Even if Congress passes such a bill in 2017, the $100/MTCO2e would raise gas prices about $1.00 per gallon by 2027. Oil markets will be awash in oil from now until then, due to decreasing oil demand from better vehicle efficiencies and electrification. $1.00 per gallon doesn't even get us back to 2014 oil prices. Where is the incentive to use less fuel or buy a vehicle with better fuel mileage? Tony Seba asserts that the EV transition will essentially be over by 2030.   

3. Border carbon adjustments would be very complex, challenging, and expensive system to implement.

4. Where is a jurisdiction that has implemented fee-and-dividend and demonstrated emission reductions? BC offsets other taxes with the fees.

5. A far better system, also revenue-neutral, punishes dirty infrastructure investment with a fee and rewards low-emission infrastructure with a rebate. Such feebates allow prices much higher than $30/MTCO2e, which is roughly where leakage sets in, and don't punish people or businesses for using the infrastructure currently available to them. See Rocky Mountain Institute on vehicle feebates.? In the vehicle feebate scenario, a new vehicle within a class is charged a fee if its efficiency is lower than the target efficiency or receive a rebate if it is higher than the target. Typical auto lifetime is 150,000 miles, so a 20 mpg car will use 7500 gallons of fuel. At $100/ton and 22 lb/gal, the lifetime social cost of emissions is $7500. Even a fraction of that $7500 would slow down sales significantly and make a nice rebate for a zero-emission vehicle. Thus the fees are dividended directly to subsidizing more efficient infrastructure. Leakage can be controlled by the state of vehicle registration. 

6. Vehicle feebates have been very successful in France and the province of Ontario. 

7. If you haven't upset someone, then you haven't changed anything. If fossil fuel companies favor your plan, it is probably ineffective.