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Fee & 100% Dividend

The “Carbon Fee & 100% Dividend” presented by Dr. James Hansen has the best potential to initiate cause and effect that will lower CO2 emissions. Fee and dividend is the policy complement that must accompany recognition of fossil carbon reservoir sizes for strategic solution of global warming (the physics: reservoir sizes imply the need to phase-out coal emissions promptly and quash unconventional fossil fuels).

Fee & 100% Dividend

The Carbon 'Fee & Dividend' presented by Dr. James Hansen has the best potential to initiate cause and effect that will lower CO2 emissions. Fee and dividend is, by all reasoned accounts, the most simple method possible to reduce CO2 emissions, move us toward renewable sustainable energy and maintaining a functioning economy.

by John P. Reisman

From the analysis done, the 'Fee & Dividend' is the best proposal existing to effectively address CO2 reduction and provide a reasonable economic mechanism to achieve our mutual goals of a functioning economy in the short and long term, in relation to human=cause global warming.


Carbon 'Fee & Dividend'

by Dr. James Hansen

1. Fee Large & Growing (but get it in place!)

  • tap efficiency potential & life style choices

2. Entire Fee Returned

  • equal monthly deposits in bank accounts

3. Limited Government Role

  • keep hands off money!
  • eliminate fossil subsidies
  • support technology development (no Manhattan projects!)
  • change profit rules and motivation for utilities
  • watch U.S. modernize & emissions fall!

A “carbon fee with 100 percent dividend” is required for reversing the growth of atmospheric CO2. The fee, applied to oil, gas and coal at the mine or port of entry, is the fairest and most effective way to reduce emissions and transition to the post fossil fuel era. It would assure that unconventional fossil fuels, such as tar shale and tar sands, stay in the ground, unless an economic method of capturing the CO2 is developed.

The entire fee should be returned to the public, equal shares on a per capita basis (half shares for children up to a maximum of two child-shares per family), deposited monthly in bank accounts. No bureaucracy is needed.

Fee & Dividend (returns fee to the public)

The public can understand this and will accept a fee if it is clearly explained and if 100 percent of the money is returned to the public. Not one dime should go to Washington for politicians to pick winners. No lobbyists need be employed.

The public will take steps to reduce their emissions because they will continually be reminded of the matter by the monthly dividend and by rising fossil fuel costs. It must be clearly explained to the public that the fee rate will continue to increase in the future.

When fuel prices decline, the fee should increase, to retain the incentive for transitioning to the post-fossil-fuel-era. The effect of reduced fossil fuel demand will be lower fossil fuel prices, making the fee a larger and larger portion of energy costs (for fossil fuels only). Thus the country will stop hemorrhaging its wealth to oil-producing states.

Fee & Dividend is progressive.

A person with several large cars and a large house will have a fee greatly exceeding the dividend. A family reducing its carbon footprint to less than average will make money. Everyone will have an incentive to reduce their carbon footprint. The dividend will stimulate the economy, spur innovation, and provide money that allows people to purchase low carbon products.

A carbon fee is honest, clear and effective.

It will increase energy prices, but low and middle income people, especially, will find ways to reduce carbon emissions so as to come out ahead. The rate of infrastructure replacement, thus economic activity, can be modulated by how fast the carbon fee rate increases. Effects will permeate society. Food requiring lots of carbon emissions to produce and transport will become more expensive and vice versa, encouraging support of nearby farms as opposed to imports from half way around the world.

Beware of alternative approaches, such as ‘percent emission reduction goals’ and ‘cap and trade’.

These are subterfuges designed to allow business-as-usual to continue, under a pretense of action, a greenwashing. Hordes of lobbyists will argue for these approaches, which assure their continued employment. The ineffectiveness of ‘goals’ and ‘caps’ is made blatantly obvious by the fact that the countries promoting them are planning to build more coal-fired power plants.

If the United States accedes to the ineffectual ‘goals’ and ‘caps’ approach, in effect continuation of the Kyoto Protocol approach, it will practically guarantee disastrous climate change. Instead it should persuasively argue that other countries also adopt fee and dividend.

The countries agreeing to this approach will also agree that imports from a country that does not apply a comparable carbon fee will have a fee applied at the port of entry. That fee, which should be added to the public’s dividend, will be a strong incentive for all countries to participate.

A carbon fee is necessary but not sufficient.

By itself a carbon fee cannot solve the energy problem and allow rapid coal phase-out. There also must be better efficiency standards in building codes, for vehicles, and in appliances and electronics. Profit incentives for utilities must be changed, so as to encourage efficiency as opposed to selling as much 6 energy as possible. These are only examples of the many things to be done. But all of these things will be done easier and more effectively in the presence of a carbon fee.

Indeed, a carbon fee is essential.

It is the tool that will impact people’s decisions and lifestyle choices for the short-term, middle-term and long-term, allowing the world to move as gracefully as possible to the post-fossil-fuel-era. In this way we will leave in the ground the hardest to extract fossil fuels as we move rapidly to clean energy sources of the future.

No Alligator Shoes!

The charts for my talk (Climate Threat to the Planet: Implications for Energy Policy) on 3 June 2008 at the PACON 2008 conference (Energy and Climate Change: Innovative Approaches to Solving Today’s Problems) are available as a pdf or powerpoint

Fee and 100% dividend can drive innovation and economic growth with a snowballing effect.  Carbon emissions will plummet far faster than in top-down or Manhattan projects.  A clean environment that supports all life on the planet can be restored.

“Carbon fee and 100% dividend” is spurred by the recent “carbon cap” discussion of Peter Barnes and others.  Principles must be crystal clear and adhered to rigorously.  A fee on coal, oil and gas is simple.  It can be collected at the first point of sale within the country or at the last (e.g., at the gas pump), but it can be collected easily and reliably.  You cannot hide coal in your purse; it travels in railroad cars that are easy to spot.  “Cap”, in addition, is a euphemism that may do as much harm as good.  The public is not stupid.

The entire carbon fee should be returned to the public, with a monthly deposit to their bank accounts, an equal share to each person (if no bank account provided, an annual check – social security number must be provided). No bureaucracy is needed to figure this out.  If the initial carbon fee averages $1200 per person per year, $100 is deposited in each account each month (Detail: perhaps limit to four shares per family, with child shares being half-size, i.e., no marriage penalty but do not encourage population growth).

A carbon fee will raise energy prices, but lower and middle income people, especially, will find ways to reduce carbon emissions so as to come out ahead.  Product demand will spur economic activity and innovation.  The rate of infrastructure replacement, thus economic activity, can be modulated by how fast the carbon fee rate increases.  Effects will permeate society.  Food requiring lots of carbon emissions to produce and transport will become more expensive and vice versa – it is likely, e.g., that the UK will stop importing and exporting 15,000 tons of waffles each year.  There will be a growing price incentive for life style changes needed for sustainable living.

The present political approach is to set carbon emission reduction goals for 2025 or 2050.  The politicians do not expect the goals to be reached, and they define escape hatches that guarantee they will not.  They expect to be retired or become lobbyists before the day of reckoning.  The goals are mainly for bragging rights: “mine is bigger than yours!”

The worst thing about the present inadequate political approach is that it will generate public backlash.  Taxes will increase, with no apparent benefit.  The reaction would likely delay effective emission reductions, so as to practically guarantee that climate would pass tipping points with devastating consequences for nature and humanity.

Carbon tax and 100% dividend, on the contrary, will be a breath of fresh air, a boon and boom for the economy.  The fee is progressive, the poorest benefiting most, with profligate energy users forced to pay for their excesses.  Incidentally, it will yield strong incentive for aliens to become legal; otherwise they receive no dividend while paying the same carbon fee rate as everyone.

Special interests and their lobbyists in alligator shoes will fight carbon fee and 100% dividend tooth and nail.  They want to determine who gets your fee money in the usual Washington way, Congress allocating money program-by-program, substituting their judgment for that of the market place.  The lobbyists can afford the shoes.  Helping Washington figure out how to spend your money is a very lucrative business

But we can save the planet and alligators by making sure that not one thin dime of the carbon fee is siphoned off by lobbyists for their clients – 100% must be returned to citizens as dividend.  Make this your motto: “100% or fight!  No alligator shoes!”

Check the position of your congresspersons.  If they spout things like “global warming is the greatest hoax in the history of the universe”, check the shoes of the people who visit them or have dinner with them.  Changes in Congress are needed if we want our children and grandchildren to win this one.

Because of great benefits to the nation, humanity and nature, this approach soon would be adopted by other nations, providing an obvious path toward international agreements.

Jim Hansen

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