Carbon Fee & Dividend Beats Carbon Tax

James Hansen and others talk of a CARBON FEE AND DIVIDEND (making a carbon tax revenue neutral.) Its very granular cost aspects gives every manager and family a real incentive to transition off fossil fuels. While he and others have spoken of the process, I’ve never seen or heard these plans converted into dollar amounts.

This chart expands James Hansen’s proposal into dividend amounts for 3 countries and an average estimate for Africa. As Hansen points out – it is the only way to get a global focus on change at every level. Once 2 or 3 larger nations set this into effect it would behoove more nations to adopt the plan, just so their own citizens would get the benefit of the dividend.

Which Nations Generate the Most CO2?

Not a “Carbon TAX” – Who would respond to such a policy?

Basics first, by giving all the fees collected back to the people, it constrains political complaints of “Big Government” feeding itself more cash. The fee & dividend proposal by James Hansen has been adopted as a starting point for many proposals. One group in the forefront is the Citizens Climate Lobby. It supports returning all fees collected to all US citizens in equal shares. Lower-income people will receive more in dividends than they will spend on higher prices.

High income people (about the top one third) consume so many products and services that they will spend more on higher prices than they get back in dividends. It is much easier, of course, for high income people to alter their consumption practices, and most of them will move to more energy-efficient, more local, and more cleanly made goods as soon as the prices of “dirty” goods start to climb. The top-most of the rich will add solar panels to their homes and buy e-cars (or such) that they can show their PC concern, but will (mostly) continue flying at the same rate and complain about the “carbon tax” because they will pay more for such energy use.

 

The balance of the top few percent will also convert and cause much of the initial early benefits from the plan as they transition to non-carbon/renewable energy options. This will lower the CO2 emissions => lowering the total fee collected, and thus lowering the rate of growth in the dividend.

Those at the bottom still consume less but energy is embedded in many products, especially food processing and delivery, so the savings there will happen via the corporations also looking to avoid the carbon tax at their end by doing the transition off carbon fuels. Growth in the renewable energy supply will allow continued dropping of production costs per kWh generated, to the point where more people can afford to individually convert to greener energy, making it more accessible to more families.

Remaining Questions

Large Families?

The Citizens Climate Lobby does strike a balance that I asked about – whether to limit the number of children eligible so as to not encourage population growth – itself a huge cause of increased CO2:

Equal Per-Person Monthly Dividend Payments: Equal monthly per-person dividend payments shall be made to all American households (½ payment per child under 18 years old, with a limit of 2 children per family) each month. The total value of all monthly dividend payments shall represent 100% of the total carbon fees collected per month.”

My question was and remains “where is the break even point likely?” and though listed by some as at about the 67th percentile, I did not spot that statement or its analysis.

What About Cap-n-Trade?