The New York times from 8th Feb 2017 carries an article announcing a carbon dividend plan put forward by leading Republicans including James A. Baker III, Treasury secretary for President Ronald Reagan and secretary of state for President George H. W. Bush; Henry M. Paulson Jr., Treasury secretary for President George W. Bush; George P. Shultz, Treasury secretary for President Richard Nixon and secretary of state for Mr. Reagan; Thomas Stephenson, a partner at Sequoia Capital, a venture-capital firm; and Rob Walton, who recently completed 23 years as chairman of Walmart.
According to the article, this plan will “reduce carbon emissions, limit regulatory intrusion, promote economic growth, help working-class Americans and prove durable when the political winds change”.
The Swedish Sustainable Economy Foundation proposed such a mechanism in its first ground-breaking study A Flexible Pollution Tax (2005) 1 . The mechanism was later studied by the Nordic Council in 2012 2 in their publication Flexible Emission Fees: An Incentive for Driving Sustainable Production and Consumption. A later white paper from the Foundation explains more 3 .
The US proposal rests on four pillars: First, the federal government would impose a gradually increasing tax on carbon dioxide emissions.
Secondly, the proceeds would be returned to the American people on an equal basis via a quarterly dividend check.
Third, American companies exporting to countries without comparable carbon pricing would receive rebates on the carbon taxes they’ve paid on those products, while imports from such countries would face fees on the carbon content of their products. This would protect American competitiveness and punish free-riding by other nations. This would encourage foreign firms to offer fossil-carbon free products to the US.
Finally the carbon tax will make many other regulations unnecessary and these can be repealed, reducing the overall regulatory burden.
According to a recent Treasury Department study, the bottom 70 percent of Americans would come out ahead under a carbon dividends plan. Some 223 million Americans stand to benefit.
The Climate Leadership Council is encouraging Republicans in Congress and the White House to not only reverse regulations from the Obama administration but take this opportunity to show the full power of the conservative canon, and its core principles of free markets, limited government and stewardship.
The Foundation hopes that Congress will listen seriously to the Council. Simulations carried by TSSEF as public “games” (see the report here from one such event) show that the Carbon Dividend mechanisms have the potential to garner popular support for drastic de-carbonization.
1 Sanctuary, M., & Hoglund, A. (2005). A Flexible Pollution Tax. A report written on behalf of Nutek-the Swedish Agency for Economic and Regional Growth.
2 Enell, M. (2012). Flexible Emission Fees: An Incentive for Driving Sustainable Production and Consumption. Nordic Council of Ministers.
3. Hinton, S., Höglund, A., & Samhälle, S. H. (2013). How Flexible Emissions Fees Can Drive Transition to Fossil-free and Sustainable Living VERSION 4.02. pdf download
- See the video explaining the application of pollutant dividends here
- An interactive simulation run as a business game with audience participation is available from the Foundation. The simulations are ways for audiences to quickly grasp the effects of pollutant fees with dividends on the voting public, the government and investment sentiment.