Wouldn’t it be great if there were some way to create jobs, continue to grow the economy, stimulate innovation, make people healthier, our nation and world safer, and address climate change? Carbon pricing with dividends can do that.
While there are other kinds of carbon pricing, such as cap-and-trade, carbon pricing with dividends involves putting an incrementally increasing fee on fossil fuels that is paid by the company that extracts the oil, natural gas, or coal from the ground. The fees collected are returned to all Americans as dividends, which compensates them for the increased costs of gasoline or other fuels. A border tax adjustment would prevent other countries from having a competitive advantage over U.S. firms because of the fee.
An economic model of the carbon fee and dividend, or CFD, proposal backed by the Citizens Climate Lobby concluded that jobs will be created, the economy will grow, and lives will be saved due to improved air quality under CFD. In that model over half of U.S. households and 58 percent of individuals end up with more money in their pockets at the end of the year from the dividends, benefiting those with the lowest incomes most.
A similar plan that differs in a few details is supported by the Climate Leadership Council, which includes such distinguished conservatives as George Schultz, former secretary of state under President Reagan; and James Baker, former secretary of state under President Bush. The Climate Leadership Council website states, “Our carbon dividends solution is: Pro-Environment, Pro-Growth, Pro-Jobs, Pro-Competitiveness, Pro-Business and Pro-National Security.”
Why bother discussing carbon pricing?
Amidst the hubbub of confirmation hearings and investigations, and the furor surrounding the upcoming midterm elections, many may have missed the article on the front page of the Billings Gazette and many other media outlets earlier this month discussing the new report from the Intergovernmental Panel on Climate Change (IPCC) released on October 8.
The report, titled the Special Report on 1.5 C, or SR15, suggests that unless we are able to dramatically decrease the amount of greenhouse gases being dumped into the atmosphere by 2030 we will see severe changes as soon as 2040 — much sooner than was previously thought. More frequent and more intense heat waves, longer droughts, and more wildfires are expected. Coral reefs, which are the source of many of the fish humans get from the oceans, could disappear due to the combination of warming temperatures and ocean acidification.
Though sea level and more intense hurricanes seem distant from the plains, Montanans will have to deal with decreased crop production from heat effects and water shortages, as well as even more wildfire smoke. Over 90 scientists reviewed 6,000 studies to develop the conclusions in the report.
The conclusions in the IPCC report should make us uncomfortable. If we aren't worried, we do not understand the report's implications. In order to prevent those dire predictions from becoming reality we need to make some significant changes in what goes into our air.
It will not be easy, but it can be done. No one company, political party, nation or region can do it alone. But, putting a price on carbon offers Americans immediate returns and is a big step toward preventing those dire forecasts. Many other countries, including China, are already working on this.
Carbon pricing alone will not be enough, but it is a start that benefits us all.
Climate change is the greatest group participation experiment in the history of the world; we can all win together.