Pass The Fee, Dividend Plan

Posted: July 19, 2014

Global warming or climate change is caused by the emission of greenhouse gases, mainly CO2, that comes from the burning of fossil fuels — oil, natural gas, and coal. Because 85 percent of the world’s energy comes from fossil fuels, we have the rather extraordinary task of converting our energy supply within a few decades to non-fossil sources.

A proposal that is getting a lot of attention on Capital Hill right now is called “Carbon Fee and Dividend,” whereby fossil fuels would be taxed but all proceeds would be distributed right back to the population on a per capita basis. Taxing fossil fuels makes their price go up and market forces would favor the use of renewable sources of energy. In this transition away from fossil fuels, the cost of energy and most other goods and services would also go up, hence the role of the dividend to offset these increased costs. To prevent other countries such as China from gaining an economic advantage, the plan calls for a border tariff on goods from countries without a comparable fossil tax.

A nationwide climate change activist organization, Citizens Climate Lobby, recently met with over 500 senators and congressional representatives to explain the Fee and Dividend approach, along with an economic analysis done by an independent firm, Regional Economic Models Inc. (REMI), that showed that it would actually strengthen the economy and create more jobs compared to the business-as-usual economy over the next 25 years, even as it reduced emissions. This is mainly due to the increased consumer spending that would result from the per capita dividend. Details of Fee and Dividend and REMI report can be found at the Citizens Climate Lobby website.
Rep. Bob Goodlatte was one of those visited by Citizens Climate Lobby. Mr. Goodlatte agreed to review the Fee and Dividend plan and the REMI report. We do not know what Mr. Goodlatte will decide, but we do know what he has said in the past about the general subject of taxing fossil fuels in an attempt to use market forces to make the transition to a carbonless energy system. In a recent letter to his constituents on this subject, he said in pertinent part:

“I agree with you on the need for protecting our environment. Our nation has made great strides towards preserving our environment. … We should be good stewards of our planet. We must also keep in mind that in order to build a strong economy and create more jobs, we need reliable and affordable energy supplies. … You specifically mentioned taxing carbon at all sources. Whether traditional, renewable, or alternative — all energy sources impact the environment. … A carbon tax would hamper the ability of companies to operate competitively in the United States, and would push jobs overseas. … Instead of government mandates and bureaucracy we should focus on policies that support technological advances and consumer choices. … During this economic slow-down we should be adopting policies that seek to rebuild our economy and create more jobs.”

The Fee and Dividend plan seems to satisfy each and every one of Mr. Goodlatte’s concerns. The plan protects the environment in two main ways: reducing the traditional pollutants associated with fossil fuels, and abating climate change. It strengthens the economy and adds more jobs than if the plan had not been implemented. The border tariff takes care of concerns of other countries gaining a competitive advantage. Consumer choice would drive the process as market forces determine price.

Of course, fossil fuels must be singled out, as they are the main cause of climate change. However, the plan calls for the carbon fee to start low and increase gradually over time, so that oil, gas and coal companies can diversify into renewables, energy efficiency technologies, and other products and services, as they see fit. We look forward with great anticipation to Rep. Goodlatte’s position on the Fee and Dividend plan.


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