cap-and-dividend

The choice of what to do with carbon revenue is a clear-cut issue of justice

The debate around various climate policies sounds complex, but there’s a simple way to understand it: follow the money. When we put a price on carbon emissions, we place value on something that used to be worthless. That means all the sudden there’s a big new pot of money. The most important question facing policymakers […]

Climate policy can be fair to families all across the country

As regular readers know, we’ve done a bit of cheerleading for the “cap and dividend” concept, which is also called “Cap-and-Cashback,” since it would hand cash receipts from government-run carbon auctions right back to consumers. Cap-and-Cashback strikes me as a fundamentally fair climate policy, since it protects low- and middle-income families from the effects of […]

Some perspective on tax-and-dividend and a better alternative

James Hansen has again been lecturing Congress on the virtues of tax-and-dividend. I'm no policy expert, but neither is Dr. Hansen, so I'm going to share some of my own amateur observations for the benefit of fellow Grist wonks.

Hansen did some calculations and came up with the following dividend estimates for a $115/ton (equivalent to $1/gallon) tax:

Single share: $3000/year ($250 per month, deposited monthly in bank account)

Family with 2 children: $9000/year ($750 per month, deposited monthly in bank account)

Wow! Free money! That sounds enticing. Of course, the money has to come from somewhere, so people's energy costs would, on average, increase by the same amount. But with that much money sloshing around there are bound to be huge inequities. For example, I live in northern California, where we have a mild climate and little coal power, and I don't need to drive much, so I might see my net income rise by maybe a couple thousand dollars. That would be nice, but folks back east who are paying more wouldn't like it one bit.

The tax rate and dividend should increase with time. ...

[The tax rate should increase until fossil fuel energy is not competitive with clean energy.]

Nothing's going to happen until the tax rate is high enough to overcome the price barrier. Once it does, there will be a "tipping point" at which clean energy will start to overtake fossil fuels and a variety of positive feedback mechanisms (competition, technology, economies of scale, learning by doing) will make the transition self-sustaining and gradually less dependent on price supports. So what is needed is a high price incentive right away -- not a gradually escalating incentive.

However, a high price incentive does not imply a high tax; it is possible to have an initially high and declining carbon price incentive implemented through an initially low and increasing carbon tax.

Van Hollen to introduce cap-and-dividend bill

Fans of carbon-pricing schemes that would return the vast majority of tax or carbon auction revenue to consumers think there’s increasing political momentum for their proposals in Congress these days. Proponents of cap-and-dividend — a carbon-pricing plan that would auction off pollution credits to industries and send roughly 90 percent of the resulting revenue to […]

Peter Barnes chats about cap-and-dividend

Here's Peter Barnes on video talking about his preferred solution to climate change: cap-and-dividend.

Much more on SolveClimate.

I understand the appeal of cap-and-dividend, not just practically but theoretically, as it establishes common ownership rights over the atmosphere. But I still have never heard convincing answers to my two biggest issues with it: one, that it will never pass, despite the evidence-free claims of its supporters that the public would rally around it, and two, that it would squander a major source of revenue that could be invested in clean energy and green infrastructure.

There's a reason Republicans stump for a carbon tax, and it ain't to reduce emissions

This may piss off some people I respect a great deal. Nonetheless, after hearing it in several off-the-record conversations in D.C. last week, I believe it's something that needs to be said publicly:

The 111th U.S. Congress is not going to pass a carbon tax. Calls for a carbon tax, to the extent they have any effect, will complicate and possibly derail passage of carbon legislation.

It's possible that a carbon tax (and/or cap-and-dividend) bill will be introduced. One or both might even make it to a full vote, though I doubt it. But they won't pass. If you want carbon pricing out of this Congress, cap-and-trade is what you're getting. It follows that your energies are best spent ensuring that cap-and-trade legislation is as strong as possible.

Them's the facts.

Through some process I find truly mysterious, the carbon tax has become a kind of totem of authenticity among progressives, while cap-and-trade now symbolizes corporate sellouthood. Across the interwebs, lefties now proclaim with absolute confidence and no small sanctimony that we should entrust our children's future to economists (whose historical contribution to environmental policy has been hostility, doomsaying, and an unbroken record of error) and the Congressional committees that control tax policy (climate champions all). "Pay to pollute," once the scourge of the green movement, is now the sine qua non of keepin' it real. It is baffling.

It doesn't seem to daunt these folks that their hostility toward cap-and-trade and support for carbon taxes has been taken up by a growing cadre on the far right, including Exxon CEO Rex Tillerson, economist Arthur Laffer, Sen. Bob Corker (R-Tenn.), and yes, even climate wingnut Sen. James Inhofe (R-Gamma Quadrant). Hell, throw in a refunded gas tax and you get America's Worst Columnist© Charles Krauthammer too. Are we to believe that these folks understand the threat of climate chaos, want to reduce climate emissions the amount science indicates is prudent, and sincerely believe that a carbon tax is the best way to accomplish that goal?

An open letter to the president and first lady from the nation's top climate scientist

 

29 December 2008
Michelle and Barack Obama
Chicago and Washington, D.C. United States of America

Dear Michelle and Barack,

We write to you as fellow parents concerned about the Earth that will be inherited by our children, grandchildren, and those yet to be born.

Barack has spoken of "a planet in peril" and noted that actions needed to stem climate change have other merits. However, the nature of the chosen actions will be of crucial importance.

We apologize for the length of this letter. But your personal attention to these details could make all the difference in what surely will be the most important matter of our times.

Jim has advised governments previously through regular channels. But urgency now dictates a personal appeal. Scientists at the forefront of climate research have seen a stream of new data in the past few years with startling implications for humanity and all life on Earth.

Yet the information that most needs to be communicated to you concerns the failure of policy approaches employed by nations most sincere and concerned about stabilizing climate. Policies being discussed in national and international circles now, which focus on 'goals' for emission reduction and 'cap and trade,' have the same basic approach as the Kyoto Protocol. This approach is ineffectual and not commensurate with the climate threat. It could waste another decade, locking in disastrous consequences for our planet and humanity.

The enclosure, "Tell Barack Obama the Truth -- the Whole Truth" [PDF] was sent to colleagues for comments as we left for a trip to Europe. Their main suggestion was to add a summary of the specific recommendations, preferably in a cover letter sent to both of you.

There is a profound disconnect between actions that policy circles are considering and what the science demands for preservation of the planet. A stark scientific conclusion, that we must reduce greenhouse gases below present amounts to preserve nature and humanity, has become clear to the relevant experts. The validity of this statement could be verified by the National Academy of Sciences, which can deliver prompt authoritative reports in response to a Presidential request¹. NAS was set up by President Lincoln for just such advisory purposes.

Science and policy cannot be divorced. It is still feasible to avert climate disasters, but only if policies are consistent with what science indicates to be required. Our three recommendations derive from the science, including logical inferences based on empirical information about the effectiveness or ineffectiveness of specific past policy approaches.

Where will the money for public investment come from?

As I said the other day, I’m going to be asking a few questions about cap-and-dividend. Today’s question is about public investment. As people around here have heard a million times by now, climate policy is a three-legged stool: carbon pricing, public investment, and regulation/regulatory reform. All of these will be necessary given the size […]

Attempting to un-vex the vexing subject of cap-and-dividend

I was on a conference call earlier this week focused on cap-and-dividend. (You can download the MP3.) C&D, if you don’t recall, is a kind of hybrid cap-and-trade/carbon tax developed by Peter Barnes. A fee would be levied on fossil fuels; the revenue would be refunded to citizens on an equal per capita basis. (Imagine […]