Chas Macquarie: Carbon Fee and Dividend explained
July 20, 2018
David Knighton, in his letter published in the Appeal on July 3, asks how the Carbon Fee and Dividend proposal would work. I'm happy to explain it to anyone who may have a similar question. But first let me clarify some of the assertions he makes in his letter.
Over the last 10 years, NASA has documented seven research groups that have examined thousands of papers and/or asked hundreds of scientists directly for their position on climate change. They found between 91 and 100 percent of published climate scientists agreed, based on the evidence, that human-caused global warming is occurring. The average was about 97 percent. There's no need to fudge any data, as Knighton claims, and there's no reason to "push a global warming/climate change agenda" — global warming is a scientific fact demonstrated by measured data and rigorous peer-reviewed studies.
The climate has indeed warmed and cooled over many thousands of years. These warming and cooling periods for the most part occurred slowly, giving plants and animals time to adapt. Over the past 800,000 years the atmospheric carbon dioxide (CO2), which is correlated to temperature, has fluctuated between 180 and 300 ppm (parts per million). It has increased from 300 ppm to 410 ppm since about 1930 due to human activities. This is much faster than past changes (except for the great extinctions — oh, those poor dinosaurs!). If we do nothing to slow the amount of CO2 and other greenhouse gasses we humans put into the atmosphere, then we're heading for a significant rise in global temperatures by the end of this century.
The current scientific consensus is if we take no action to reduce CO2 emissions, there will be a rise of between 7 and 12 degrees by the end of this century. This would produce devastating impacts to agricultural production (leading to food shortages), coastal communities (due to sea level rise), and water supplies. It would increase the frequency of wildland fires, droughts, and floods; and result in mass species extinction due to habitat loss.
The debate isn't whether global warming is occurring, but about what to do to minimize the worst impacts, which is where Carbon Fee and Dividend (CF&D) comes in. Scientists agree to keep the impacts at a reasonable level we need to reduce the amount of CO2 and other greenhouse gases we put into the atmosphere. Economists overwhelmingly agree the most effective way to do this is to put a price on carbon.
Carbon Fee and Dividend is a revenue-neutral proposal that would put a fee on fossil fuels at the first point of sale, as near as possible to the well, mine, or port of entry. This fee would increase each year by a regular amount. This will require far less bureaucracy than pollution-point (power plants, factories, etc.) monitoring and enforcement.
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All of the proceeds, less administrative costs (estimated at 5 to 7 percent at startup, declining to just more than 1 percent by year 10), are then divided up and provided to American households, equally per person, as a monthly "carbon dividend," similar to the monthly dividend Alaska residents get from that state's oil revenues. About 58 percent of citizens would receive more in their dividend payments than higher energy prices would cost them.
A border carbon adjustment (BCA) would be placed on carbon-intensive goods imported from or exported to countries without an equivalent price on carbon. This adjustment discourages businesses from moving to more permissive regimes and encourages other nations to adopt similar carbon pricing.
A predictably increasing carbon fee will send a clear market signal that will unleash innovation and investment in technologies that reduce greenhouse gas emissions. It will also encourage climate-friendly consumer behavior while helping families cope with the cost of the transition. A study by Regional Economic Models Inc. (REMI) compared the results of CF&D to doing nothing to reduce Greenhouse Gas emissions (business as usual) and found that:
CO2 emissions decline by 33 percent after 10 years and 52 percent after 20 years. That's because of strong, steady market-driven changes in the ways we make and consume energy.
National employment increases by 2.1 million jobs after 10 years, and 2.8 million after 20 years. These are jobs that wouldn't happen without a carbon fee.
Reduced air pollution saves 13,000 lives annually after 10 years, with a cumulative 227,000 American lives saved over 20 years.
Gross Domestic Product (GDP) increases by $70 to $85 billion from 2020 on, with a cumulative increase of $1.375 trillion after 20 years.
The take-home message is Carbon Fee and Dividend strengthens the economy and creates jobs while slashing CO2 emissions and improving Americans' health. So, when a bill gets introduced in Congress, tell Rep. Mark Amodei you support it. To learn more details about Carbon Fee and Dividend, visit https://citizensclimatelobby.org.
Chas Macquarie is a civil engineer, outdoor enthusiast, and a resident of Carson City.