New Hampshire town meetings are concerned with the local-est of local issues – two-acre zoning or buying a new fire truck or whether to spend money on a municipal fireworks display for July 4. But some folks are trying to get a national, even global, issue on the warrants: carbon pricing.
As I report in today’s Monitor (story here), Citizen’s Climate Lobby has volunteers in at least 60 towns getting signatures to put a petitioned warrant article supporting the idea of a carbon fee that would be reimbursed to households in the state. They’re emphasizing this you’ll-get-a-check aspect: “The money goes back to the people, it doesn’t go into Exxon’s profits or Saudi Arabia’ pockets.” The name of the drive makes that clear: Carbon Cash-Back Coalition.
Putting a per-ton price on carbon emissions is generally acknowledged to be the most straightforward and one of the most effective ways to tackle climate change. Make the cost transparent and humans will respond to the incentive, or so goes the thinking.
Return to the Concord Monitor
I have to take issue with “transparent”. Such schemes are anything but. Clue number one is the “you’ll-get-a-check” marketing, appealing to the folks who are gladdened by an IRS tax refund. (They really should put “Thanks for the interest-free loan, sucker” on those checks.)
Incentives? If everyone got back exactly what they paid in, there would be zero net incentive. And the whole endeavor would be pointless. So there will, of course, be net winners and losers, but that’s obscured by the “money going back to the people” gimmick. The who wins/loses ball will be hidden for as long as it takes to pass the legislation.
People might notice the direct effect: higher prices for gas and oil. Less obvious will be the hidden sales tax on anything you buy that has fossil fuel energy involved somewhere in its supply chain. (To a first approximation that would be “everything”.) That “tax” won’t be broken out as an explicit number; you’ll just maybe notice the price has gone up for some reason. Again, the opposite of “transparent”.
Per a Jan. 17, 2019 Wall Street Journal article, ECONOMISTS’ STATEMENT ON CARBON DIVIDENDS, over 3,500 US economists (including all the former chairs of of the Federal Reserve) believe that “a carbon tax offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary. To maximize the fairness and political viability of a rising carbon tax, all the revenue should be returned directly to U.S. citizens through equal lump-sum rebates. The majority of American families, including the most vulnerable, will benefit financially by receiving more in ‘carbon dividends’ than they pay in increased energy prices.”
The planet is experiencing a climate emergency. We must stop burning fossil fuel and quickly. I’m all for doing it the most efficient, fairest way.
Hi Paul,
People do not get back what they pay from the higher prices. The dividend they get back is one equal share of all the money collected. Those with a smaller than average carbon footprint get extra money each month, and those with a large than average carbon footprint pay more than they get in their dividend.
What is transparent in this approach is the cost of pollution. By making it a cost of producing fossil fuels, the cost of pollution is reflected in the price of the coal, oil, and natural gas, and the energy generated from them, throughout the economy. This price signal incentivizes producers and consumers to reduce pollution, because it costs them money.
It’s a market-based, revenue-neutral solution. This approach originated from sound economics. William Nordhaus received the Nobel Prize in Economics for his work on carbon pricing, because it is so well-respected by that community. 3500 US economists recently endorsed the approach: http://clcouncil.org/economists-statement/.
The benefits of the approach are being seen in Canada, which is doing this already, and in the US independent studies show powerful benefits: http://citizensclimatelobby.org/remi-report/.
I agree that all legislation should be looked at with a healthy skepticism but I don’t agree that this is not a transparent mechanism to reduce fossil fuel use. Nobody is hiding the fact that most every good or service requires fuel. So as the cost of fuel increases, the cost of most goods and services will increase accordingly. And as economists from all over the globe say, both democrats and republicans, putting a price on carbon pollution is the best way to let the market provide incentive for reducing the burning of fossil fuels through efficiency and renewable energy.
Also, the Carbon Fee and Dividend approach is not a tax because government does not decide how to spend the money collected. All collected fees go to a trust fund that gets divided equally and paid to every US Citizen. For most Americans the check you receive will be equal to the sum of your increased costs. But crafty people will use their check to buy a more efficient vehicle or do efficiency work in their home or business to cut their fuel costs or seek out products/services who have done the same and therefore have lower prices.
I am a big fan of this approach but I’m always looking for other solutions to the climate crisis as well. It sounds like you are skeptical of this legislation, please share your ideas for ways to equitably and significantly reduce the burning of fossil fuels?
The fee/tax on carbon should change consumer behavior. When we see gasoline prices going up, we should be more likely to buy a more efficient vehicle next time, or drive less.
Of course, the subsidies to fossil fuels, like trillions of our tax dollars underwriting the wars in the Middle East( to keep the oil flowing) are not transparent either. But, we don’t have a choice of not checking off that box on our tax returns!
The carbon fee and dividend will give us the incentive to select the less fossil fuel intensive option and thereby save our consumer dollars while cooling the planet.
Hi David,
Thank you for the great front-page article in the Concord Monitor last week, and for digging deep into meaningful climate solutions! You ventured where only the bravest dare go.
New Hampshire citizens can go to carboncashback.org to learn more about the town warrant article project (and join if they are interested).
As you mentioned, putting a price on climate pollution at the source is the most cost-effective way to reduce it. By rebating all the money collected back to people equally to recoup them for their loss from that pollution, the carbon cash-back policy also protects household purchasing power. This is an approach supported by most economists: clcouncil.org/economists-statement/.
This solution gets results and has many co-benefits. Emissions go down and everyone gets the same one-share back of all the money collected each month. Two-thirds of all households will break even or receive more cash back than they pay in higher prices due to the carbon fee because they have an average or smaller than average carbon footprint. Anyone can come out ahead, but most low-income households automatically have smaller than average carbon footprints because 60% of our carbon footprint is in the things we buy. This is a climate solution that helps the poor.
At the federal level, we put the price of pollution on imports and take it out of exports to protect US jobs. The side-benefit of that is that it also strongly motivates the rest of the world to match our carbon price. The IMF says we need a global carbon price of $75 by 2030 to be on a safe emissions reduction track. The federal carbon fee and dividend policy uses a steadily increasing fee on the production of fossil fuels to achieve that price, so the global reach of this solution drives the necessary carbon price around the world as we need for our own safety.
The US can lead the world in the transition to a clean energy future using this market-based, revenue-neutral, solution.
There is a bipartisan bill in Congress right now that does all that: energyinnovationact.org/.
This report from Columbia University found great results: https://energypolicy.columbia.edu/research/report/assessment-energy-innovation-and-carbon-dividend-act
If you want to take action to help address climate change please write Congress to support the Energy Innovation Act at cclusa.org/write/. Check the box to join Citizens’ Climate Lobby while there, and you’ll get an occasional newsletter about other effective actions you can take to help Congress act, and positive information about climate solutions.
It’s time we PAY FOR OUR POLLUTION! It’s the only way we’ll EACH be incentivized to do a better job of making the changes we need to make to keep fossil fuels in the ground! And, yes, I agree with the comment above. If a carbon fee will help us get off our addiction to fossil fuels and save lives and money by stopping our brutal history of war over oil, then I can’t wait to pay my carbon fee (and get my “cash back”!
Thanks, David, for your excellent story on the Carbon Cash-Back campaign. I’m not a regular reader of the Concord Monitor, but your story–one of the few in the news media that takes the climate crisis seriously–makes me think that I should consider becoming a subscriber.
As a former NH legislator on the Science, Technology and Energy Committee, I’ve worked for years to get more resources for energy efficiency and to promote renewable energy in NH. Those will both help us transition to a clean energy economy and get off fossil fuels with their harmful emissions.
But as good as those efforts are, they won’t reduce enough carbon dioxide emissions to avert the coming climate crisis. We need to add carbon pricing which will reduce our emissions by 40% over the next 12 years. The best model is a carbon fee and dividend (the cash-back model) that returns the money to every individual so if prices go up, they have the extra money to pay for it.
Tell your legislators in Concord and in Washington to take action on the climate crisis by voting for a carbon pricing bill.
Twelve years ago 164 New Hampshire towns passed resolutions to act on climate improvement. In that decade we have witnessed unprecedented global climate disasters, including here in the U.S., that have taken lives, burned our forests, washed away our shores, destroyed our homes, broken families, rendered swaths of soil cropless, dried our aquifers and shrunk our lakes, challenged our borders with climate-displaced families seeking survival, spiked pollution-related illnesses, and so much more. It is well past time to act if we are to leave a habitable earth to our children and theirs. The Carbon Cash-Back approach is our best hope, and we need it ASAP.