Fee and dividend plan would curb climate change

Eric Johnson, Iowa City Climate Lobby 4:32 p.m. CDT October 19, 2016

We have a gigantic pricing mistake in our country. We currently don’t charge anyone anything for the waste products produced when fossil fuels are burned. This makes fossil fuels artificially cheap. Correcting this error in pricing will increase the cost of fossil fuels to where they should be and at the same time will level the playing field for non-polluting energy sources, like wind and solar.

The problem with correcting this pricing error is that several aspects of our economy depend on fossil fuels. We have woven them into our daily lives. A sudden cost increase would cause the economy to take a hit, something we can’t afford, as we’re still struggling to recover from the Great Recession of 2008.

However, economists and policy experts have figured out a great way to gradually correct the price of fossil fuels that will actually create jobs and boost our economy.

Here’s how it works. The government will collect a fee from all companies that introduce fossil fuels into our economy. The more fossil fuels that are introduced, the higher the fee. For example, a starting point might be to charge a fee of $15 per ton of carbon dioxide emissions. This corrective fee will cause fossil fuel companies to pass the cost on to consumers in the form of higher prices. However, each month, these fees will be divided equally. The government will distribute all of this money in the form of a check, called a “dividend,” to each household in America.

This dividend check will offset the newly increased prices described above. In fact many Americans, especially poor Americans who purchase less fossil fuels than the wealthy, will profit from this system.

If Americans want to increase their profits from this government check, they can switch to energy sources and products that are made more from renewable sources of energy. Renewable sources of energy and products made with renewable energy are already accurately priced, and their cost will remain the same under this system, or continue to decrease as new solar and wind technology is developed.

This carbon fee-and-dividend plan also includes measures to add fees to products that we import from other countries that don’t currently correctly price carbon pollution. However, contrary to popular knowledge, most other countries, China included, are either already correcting for the price of carbon dioxide pollution, or are in the midst of enacting a correction. For example, Shanghai and Beijing (both larger than New York City), have already put carbon dioxide pricing into place. A full 20 percent of the world’s carbon emissions are either currently being priced, or the law to correct their price has been passed but hasn’t taken effect yet. And another 30 percent of the world’s carbon dioxide emissions are in the planning stages of being priced. That’s half of the world’s carbon dioxide emissions! In fact, if you look at the top 10 largest economies in the world, they are all pricing carbon dioxide emissions, except for the U.S.

Aside from it being embarrassing that the U.S. has to play catch-up with the rest of the top economies, our reluctance to accurately price carbon emissions is also risky to our economy and our future status in the world. In all of these other powerhouse economies, the renewable energy sector is developing rapidly. At some point, the world will simply run out of fossil fuels, and we will be forced to switch to renewable energy. If we wait until that time, all of the other top economies will have developed advanced renewable energy sectors, while our renewable energy sector will be in its infancy, and it will take us many years to catch up. It’s even conceivable that we could go from being dependent on the Middle East for our fossil fuel energy to becoming dependent on China for our renewable energy.

Fortunately, momentum for acting on climate change is building quickly in the House. Earlier this year, a bipartisan group of U.S. Representatives dedicated to resolving climate change was formed. It’s called the Climate Solutions Caucus, and in the six months since its formation, the group has quickly swelled to 20 members: 10 Democrats and 10 Republicans. However, we still have a long way to go before we can pass this kind of legislation. Call and write your Congressmen and senators now, and ask them to join the Climate Solutions Caucus. Or ask them to pass “carbon fee-and-dividend” legislation, so we can bring our energy supply home, stimulate our economy and create tons of new jobs.

Iowa City Climate Advocates member Eric Johnson lives in Oxford.


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