A carbon tax is key to tackling the climate crisis – and carbon dividends could lead Congress to back one
The vast majority of these subsidies represent the untaxed cost to humans of burning fossil fuels: climate disruption and the health effects of air pollution. Any serious climate program must eliminate them without causing economic havoc.
Fortunately, many of these programs are immediately available. Three pending climate bills would meet Biden’s bold climate goals, meet the criteria for budget reconciliation, and meet the all-important political test of gaining public support.
The Energy Innovation and Carbon Dividend Act (HR 2307), the America’s Clean Future Fund Act (S. 685) and the Save Our Future Act (S. 2085) all share two key provisions: a predictable increase in fuel costs. polluting fossils and a partial or full return of income to every American.
Their first characteristic is the most familiar. An unprecedented 3,623 US economists from all political backgrounds, including 28 Nobel Laureates, have declared that “a carbon tax offers the most cost-effective lever to reduce carbon emissions at scale and at speed. required “.
The second feature of these bills, known as the “dividend”, is the key to helping members of Congress protect the physical and economic well-being of their constituents without being labeled “pro-tax” by opponents. .
As Treasury Secretary Janet Yellen argued, “the most politically viable way” to build support for a tax on carbon polluters is to earmark revenues for the immediate improvement of most US voters – before its climatic benefits even begin to manifest. Providing “carbon dividends” to every resident turns cod liver oil from a new tax into a milkshake that most Americans would happily consume for years to come.
Analyzes from the US Treasury, Columbia University, and other research centers agree that returning carbon tax revenues in the form of equal dividends to each individual provides net financial benefits to approximately two-thirds of Americans, while encouraging them to reduce their carbon footprint. These benefits complement the huge but less immediately tangible benefits of mitigating climate disruption and deadly air pollution.
This approach appeals to many conservatives as well as progressives.
Two dozen Utah Republican politicians recently said, “We support a carbon dividend approach that charges a fee on carbon emissions and returns all the money back to the American people in the form of dividend checks. This approach does not require severe government oversight. The royalty spurs markets to adopt cleaner technologies, while the dividend protects families from the effects of rising energy prices. Most families should be able to get by financially and they will be rewarded for the reduction in emissions as they wish. “
Economist James Boyce, author of “Economics for People and the Planet,” made the progressive argument that “carbon dividends would help alleviate the problem of broad and growing income inequalities. At the same time, dividends universals can help foster an ethic of shared interests and shared responsibilities at a time when division appears to be a danger for pluralist societies.
According to a US Treasury study, dividends from a carbon tax of $ 50 per tonne would increase the net income of the lowest tenth of incomes by almost 9%. Lower earnings would accrue to middle-income households. Most black, Latin American, and Asian-American families would also benefit.
Most voters are already seizing these benefits. US opinion polls consistently show 60 to 70 percent support of voters for a tax on fossil fuel companies coupled with carbon dividends.
Few climate policies would be as effective as economy-wide carbon charges. Little or no climate policies would also immediately improve the well-being of ordinary Americans and gain political support as a carbon dividend. Carbon royalties and dividends should be at the heart of any climate policy in the next reconciliation bill.
James hansen is Director of the Climate Science, Outreach and Solutions Program at Columbia University Earth Institute. Jonathan Marshall is a former economics writer for the San Francisco Chronicle and co-founder of the Economics Policy Network of Citizens Climate Lobby.