Ever tried to lose weight? Old habits of behavior are hard to break, even when doing so is in our best interest. We need a powerful motivation to move us toward even a positive goal. This is the idea behind “carbon fee and dividend.”
We all know we need to transition away from our high-carbon lifestyle for the sake of the planet — reducing greenhouse gas emissions is the key to addressing global warming and scientists say this needs to happen yesterday.
So, what can motivate us to change our longtime, gas-guzzling habits? I once had an economics professor say, “If you want to change a person’s behavior, talk to their wallet.” That’s what carbon fee and dividend does and here’s how it works:
1. A fee is placed on fossil fuels at the source (well, mine, port of entry). This fee starts at $15 per ton of CO2 equivalent emissions, and increases each year by $10. (So the first year we would see about a 15 cent increase in a gallon of gas).
2. 100 percent of this net fee is returned to American households on an equal basis. Under this plan, about 2/3 of all households would break even or receive more in their dividend checks than they would pay in higher fuel prices due to the fee, thereby protecting middle- and lower-income households.
3. A border tariff adjustment is placed on goods imported from, or exported to, countries that have not placed an equivalent price on carbon. This adjustment would both discourage businesses from relocating to where they can emit more CO2 and encourage other nations to adopt an equivalent price on carbon.
A predictably increasing carbon price will send a clear market signal, which will push entrepreneurs and investors toward a green economy. This is where the American gifts of creativity and ingenuity come into play. Venture capitalists and banks seeing a predictable price signal will create breakthroughs in innovation that in some cases are unimaginable at this point. This is a win-win solution for an urgently warming climate crisis.
The road to clean, renewable energy is paved with new job-creation and economic stimulus. For every $1 million spent on oil and gas energy, less than one job is created; coal (1.9 jobs), building retrofits for energy efficiency (7 jobs), mass transit services (11 jobs), building the smart grid (4.3), wind (4.6), solar (5.4) and biomass power generation (7.4).
The green economy already supports more jobs than the fossil fuel economy, and has for years. The writing is on the wall: The key to creating American jobs now and in the future is not investment in fossil fuels, it is investment in the green economy.
A carbon fee and dividend proposal could garner bipartisan support in Congress. Conservatives prefer free-market solutions with less government regulation and no additional taxes that grow the size of government. As more conservative leaders embrace a revenue-neutral carbon fee, more conservative voters will recognize how this aligns with their worldview. Liberals would be wise to agree to roll back some emission regulations in favor of accomplishing those goals and then some.
Reducing the threat of a warmer climate can save our country the agony and expense of sea level rise, extreme weather events (hurricanes), droughts, wildfires, crop failure, and loss of livestock and human lives. A carbon fee and dividend may be our best chance for a livable world.