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Pitch

Create a Carbon Fee and Dividend Policy


Description

A carbon fee and dividend would place a steadily rising fee on carbon, at the point of entry into the economy (at the wellhead, mine, port of entry) starting at $15 a ton.  The fees collected would be returned 100% to the citizenry to offset potential higher energy costs.  The solution of putting a progressively rising price on carbon and recycling all the proceeds back into people's pockets is based on free market principles, does not increase the size of government, is revenue-neutral and thus is not a tax increase, but a tax shift. It allows the market to pick the winners and losers, not the government, and thus is far more efficient and less beaurocratic. It creates accountablity by internalizing externalities for which the public is already paying.  This kind of price signal would unleash a tremendous surge in investment, would usher in a new industrial revolution and create millions of new jobs. It would re-establish American industrial prowess and leadership and increase energy security while protecting public health from the effects of air pollution. Carbon pricing does not exclude other methodologies such as caps. 

Summary

It is imperative that we reduce carbon emissions as quickly as possible.  To achieve a reduction many actions are required such as improving energy efficiency, new fuel standards, etc but one of the best ways is to disincent the fossil fuel industry in a way that is revenue neutral.  A carbon fee on each ton of carbon at the source is one such way, with the fees (or dividend) returned to the citizenry.  This is much better than cap and trade schemes because it is simple to understand, administer and monitor, is not easily manipulated or frauded, and does not let some pollute more while others pollute less. This concept is gaining support and momentum within political circles, slowyly, but surely.


Category of the action

Reducing emissions from electric power sector.


What actions do you propose?

A carbon fee and dividend would place a steadily rising fee on carbon, at the point of entry into the economy (at the wellhead, mine, port of entry) starting at $15 a ton.  The fees collected would be returned 100% to the citizenry to offset potential higher energy costs.  The solution of putting a progressively rising price on carbon and recycling all the proceeds back into people's pockets is based on free market principles, does not increase the size of government, is revenue-neutral and thus is not a tax increase, but a tax shift. It allows the market to pick the winners and losers, not the government, and thus is far more efficient and less beaurocratic. It creates accountablity by internalizing externalities for which the public is already paying.  This kind of price signal would unleash a tremendous surge in investment, would usher in a new industrial revolution and create millions of new jobs. It would re-establish American industrial prowess and leadership and increase energy security while protecting public health from the effects of air pollution. Carbon pricing does not exclude other methodologies such as caps. 


Who will take these actions?

To impose such a fee would require an act of Congress signed into law by the President.  This has already begun with the first introduction of the "Save Our Climate Act" H.R. 3242 which will die in Committee at the end of this Congressional session.  But 21 Democratic co-sponsors signed on and we have been working to gain bi-partisan support.  A new bill is being drafted that will be introduced next year.  The actual fee collection will be carried out by the IRS.  Carbon emissions per ton per type of fuel and emitter are already well established by EPA and other monitoring bodies.


Where will these actions be taken?

The fee will be imposed at the point the carbon enters the economy.  In the case of US produced carbon it would be paid by the first producer, at the oil wellhead or coal mine for example.  In the case of carbon from foreign sources a border tax adjustment mechanism will be required to ensure that we do not cause unfair competitive advantage to foreign sources.


How much will emissions be reduced or sequestered vs. business as usual levels?


What are other key benefits?


What are the proposal’s costs?


Time line


Related proposals


References