revenue-neutral carbon fee & dividend march 31, 2015 company logo
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Revenue-neutralCarbon Fee & Dividend
March 31, 2015
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Citizens’ Climate Lobby’s Focus• Lobby U.S. Congress to pass “carbon fee and
dividend” legislation
– Put a price on carbon
– Fossil fuel use declines
– Alternate energy economy grows
– Less carbon is emitted
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Carbon Fee and Dividend How it works:• Apply fee to all fossil fuels and other greenhouse gases
(GHG)
• Fee is $/ton of CO2 equivalent emissions and results in equal charges for each ton of CO2 equivalent emissions potential in each type of fuel or GHG
• Collect the fee as far upstream in the economy as practical
• Steadily increase the fee each year
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Carbon Fee and Dividend How it works (cont’d):• 100% of fee revenue is returned to households
• Monthly dividends are in equal shares
• 2/3 of Americans break even or come out
ahead
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Carbon Fee and Dividend Provides a price incentive:• Rising private investment in alternate energy,
energy efficiency
• Falling investment in fossil fuels
• Consumers switch to energy efficient products
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Carbon Fee and Dividend …and business:• Predictable fee simplifies business planning
• Businesses pass along increased costs
• Border adjustments protect domestic manufacturers and exporters
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Carbon Fee and Dividend
Border tax adjustments
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Price carbon
or pay a
border tariff
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Carbon Fee and Dividend …and government:• “Revenue neutral” with respect to federal budget
• Administered by existing government agencies
• Does not increase the size of government
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Carbon Fee and Dividend Bipartisan appeal:• Republicans like revenue neutrality
• Republicans – like free market approach and dislike EPA regulation
• Democrats increasingly favor carbon fee
• Democrats - accept revenue neutrality
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Carbon Fee and Dividend Example: Fee starting at $15 per ton of CO2
• Gasoline price increases 14 cents per gallon
• Electricity prices up .81 cents/kWh (8%)
• Monthly dividend $54 per household
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Carbon Fee and Dividend Example Year 10:
Fee is $15/ton first year; increases $10/year
• Gasoline price up $1.08/gal after ten years
• Electricity price up 3.61 cents/kWh (32%)
• Monthly dividend $324 per household
• CO2 emissions reduced to 69% of 1990 levels
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Carbon Fee and Dividend In ten years, clean energy becomes cheaper than carbon-based energy; electricity generation from coal phased out.
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REMI: Report
“The Economic, Climate, Fiscal, Power,
and Demographic Impact of a National
Fee-and-Dividend Carbon Tax”
By: Regional Economic Modeling Inc. (June 9, 2014)
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REMI: Report SummaryImpact of Carbon Fee and Dividend
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REMI: Report SummaryNo economic case against Carbon Fee
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Economic
Climate
Fiscal
Humanitarian
● 2 million more jobs
● Reduces carbon dioxide
● Increases household incomes incomes
● Saves Lives
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Carbon Fee or Cap?
Citizens’ Climate Lobby supports:
• A Carbon Fee and Dividend policy proposal
• This approach has several advantages
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Advantages of a Carbon Fee
• A carbon fee lends predictability to energy prices, depending on hindsight rather than foresight
• Businesses and consumers can plan investments accordingly
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Advantages of a Carbon Fee
• Transparent and easily understandable
• Can be set up in a short time without additional bureaucracy
• Has low administration costs
• Less open to the opportunity for manipulation by special interests
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Advantages of a Carbon Fee
• Addresses emissions from every sector
• More easily lends itself to border adjustments between countries with different or no carbon fees
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Advantages of a Carbon Fee
Politically....
• Republicans opposed to cap because of bureaucracy
• Democrats opposed to trading because it causes fluctuations in price of energy
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Advantages of a Carbon Fee
CCL believes a straight forward rising fee is a more
efficient mechanism for reducing emissions than a
declining cap, and that it has a better chance of
garnering bipartisan support.
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Federal Carbon Pricing Legislation*
Both revenue neutral and 100% of revenue
returned to citizens!
McDermott: Managed Carbon Price Act of 2015 • Pricing: Secretary of Treasury and the EPA set the prices of
permits.• Where assessed: Midstream to upstream• Goal: Emissions 80% less than 2005 levels in 2056-2060• Revenues: Monthly dividend checks to individuals
* as of March 2015
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Jim McDermottRepresentative(D – WA)
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Federal Carbon Pricing Legislation*
Both revenue neutral and 100% of revenue
returned to citizens!
Van Hollen: Healthy Climate and Family Security Act of 2015 • Pricing: Secretary of Treasury and the EPA will determine
initial quantity of carbon permits to be auctioned (4 auctions a year).
• Where assessed: Midstream to upstream• Goal: 80% less than 2005 levels in 2050• Revenues: Quarterly payments to individuals•
* as of March 2015
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Chris Van HollenRepresentative(D – MD)
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Questions
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