Posted 4.27.2016 in Articles
Using the power of the people to address climate change
Finding a mechanism to enable the transition from a carbon-intense fossil fuel economy to a low-carbon renewable economy is one of the most urgent dilemmas of modern times. The problem is not just one of environmentalism, but also of national security. The US Department of Defense's “National Security Strategy” plan, issued in February 2015, opens with the warning “climate change is an urgent and growing threat to our national security, contributing to increased natural disasters, refugee flows, and conflicts over basic resources such as food and water. These impacts are already occurring, and the scope, scale, and intensity of these impacts are projected to increase over time.”
Citizens Climate Lobby is a grassroots organization that empowers citizens to campaign for policies that use market driven mechanisms to address climate change. They propose a revenue neutral carbon tax whose proceeds are paid back to citizens in a way that encourages the use of renewable energy sources and discourages the use of fossil fuels. The organization's goal is to reduce carbon dioxide levels to 90% of 1990 levels by 2050.
There are nearly 350 Citizens Climate Lobby (CCL) chapters nationwide and a growing number of international chapters. CCL trains volunteers in each chapter to become effective advocates for a carbon fee and dividend system. Whenever a new CCL chapter is created, someone from the organization comes to the community and leads a workshop to explain how CCL works. Once trained, the chapters come together to listen to monthly calls hosted by CCL. After the calls, CCL advocates are encouraged to develop plans of action. These conference calls can include talks by climate scientists, discussions of recent CCL achievements, and training on important subjects (for example, what to tell a person who argues that American and Canadian climate action is pointless given Chinese emissions growth).
Electric Car Insider talked to Carol Kravetz, Climate Leader with The Climate Reality Project and CCL Advocate at the Los Angeles National Drive Electric Week event. CCL was at the NDEW event promoting their cause and signing up new citizen advocates.
“We are pushing for national legislation that will charge a carbon fee for fuel coming out of the ground,” said Kravetz.
The CCL wants legislation enacted that charges a fee based on the amount of carbon dioxide produced by fossil fuels. The revenue collected is repaid to households as a dividend.
The legislation will be revenue neutral meaning all fees collected will be paid back with a per-person payment issued each month. American citizens over 18 are eligible to receive the dividend while children under 18 are eligible for a half payment. Each household is eligible for 2 child payments.
The fee is based on the amount of carbon in fossil fuels such as oil, gas and coal. When burned these fuels release carbon dioxide (CO2) into the atmosphere. The fee is calculated on the tons of CO2 the specific fuels generate, and it would be collected at the earliest point of entry into the economy like a well, mine or port. The fee would start out at $15 per ton and increase $10 each year until levels outlined in the legislation are met.
Currently cap and trade is the system in place for addressing green house emissions. Under this regulatory system, a limit (or "cap") on certain types of emissions or pollutions is set, and companies are permitted to sell (or "trade") the unused portion of their limits to other companies that have not complied with the caps. The system was designed to provide companies with a profit incentive to reduce their pollution levels faster than their peers. But many environmental advocates don't think the programs are effective enough at reducing emission levels.
“Cap and trade is fine,” said Kravetz, “but it still allows people to pollute because they can sell off their credits and [buy credits to] continue to pollute.”
CCL advocates for the fee and dividend approach for two reasons.
First, it's the simplest option. The carbon fee would be implemented at the point where the fuel enters the system – the coal mine, oil well or fracking site - because it is easier to administer at this point than at other points along the supply chain. By charging the fee at the point the fuel enters the market, the fees can be applied to exports without violating any tax or trade rules. There is also already a system in place to return the dividend to citizens along with annual tax returns.
Second, it's the most feasible option to implement from a practical and political standpoint. Knowing businesses will offset the carbon fee by increasing costs to consumers, the dividend counters the cost of the carbon fee for most people so there is minimal financial impact on citizens. Since producers will want to minimize their costs long-term and keep customers when prices increase, this fee also incentivizes development of alternative fuel options.
Ultimately the goal is to make fossil fuels more expensive while encouraging the development of alternative fuels.
The CCL plan also addresses the import of fuel into the U.S. from countries that do not have carbon fees. The legislative proposal calls for rebating or eliminating the border adjustment fee to American companies that export to countries without similar carbon pricing. This levels the playing field for American companies and complies with the World Trade Organization (WTO) rules.
Because of the carbon fee border adjustments, exporting countries will be encouraged to adopt similar carbon pricing, or pay fees at the border. All countries that adopt similar carbon fees are on the same level playing field and can make border adjustments with countries that do not adopt such taxes. This encourages all countries to place similar taxes on carbon. As more nations adopt carbon fees, worldwide demand will bring the best green technologies to market faster, driving down costs and making the transition to a green economy less expensive for everyone.
The Cost To The Customer
Once enacted, prices for fossil fuels will go up every year but there will be a dividend given to consumers to help offset the rising cost. People will be able to save more of their dividend check if they adopt eco-friendly practices like using energy efficient lighting and appliances, upgrading their insulation or windows and replacing old furnaces with units that are more energy efficient. When it comes time to get a new vehicle, there will be more financial incentive to purchase an all-electric vehicle.
For an example of how the fee would impact consumers, examine the costs that would be added to gasoline. A $1 per ton increase in the cost of gasoline caused by the carbon fee would equal a 1 cent increase per gallon on the price of gas. So, if the carbon fee is $15/ton, gasoline will go up by about 15 cents per gallon the first year. Each additional year, the cost of gasoline will increase at the rate outlined in the legislation, which would be an additional 10 cents per gallon. These fees would be charged to the company producing the gasoline. Customers using gasoline would pay the added costs while customers who drive electric or high-efficiency vehicles would use less of the fuel thus reducing their costs.
The dividend is 100 percent of the total carbon fees collected. The revenue will be divided up and given back to all households equally. This dividend helps citizens pay the increased costs associated with the carbon fee while the nation transitions to a clean energy economy. Because not everyone uses the same amount of carbon, the majority of American households (about 66 percent according to the CCL) are estimated to earn back as much or more than they pay in increased costs
Once carbon fees and dividends are enacted, CCL is hopes the Department of Energy will propose fees for other greenhouse gasses including methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons (HFCs), perfluorcarbons, and nitrogen trifluoride. The proposed legislation also calls for incrementally eliminating existing tax-cuts and incentives.
But before looking too far into the future, Kravetz says, “Enough people need to get on board to put enough pressure on congress so they'll say 'There's a lot of people out there who really want this and it's something we can get behind.'”