The Climate Lobby – Fee and Dividend

Note: This is a US version of the proposal and can be used as a basis of understanding the simple nature of the proposal. More to come on this as it develops, but the basic proposal is the foundation.

Carbon Fee and Dividend Act

Proposed Findings:

1. Causation: Whereas increased atmospheric carbon dioxide increases positive climate forcing causing warming,
2. Endangerment: Whereas further increases in global temperatures pose imminent risk to the resource and monetary economy and national security,
3. Mitigation: Reduce carbon dioxide (“CO2”) emissions and return to 330 ppm of CO2 or below,
4. Co-Benefits: Whereas measures proposed in this legislation will benefit the economy, the environment and national security, by improving the energy security of the United States,
5. Benefits of Carbon Fees: Whereas phased-in carbon fees on fossil fuels (1) are the most efficient, transparent and enforceable mechanism to for an effective and transition to a clean-energy economy, (2) will stimulate investment in clean-energy technologies by insuring that fossil fuels lose their competitive price advantage over clean energy, and (3) give all businesses incentive to increase energy-efficiency and reduce carbon emissions and remain competitive on balance,
6. Equal Monthly Per-Person Dividends: Whereas equal monthly dividends (or “rebates”) from carbon fees paid to each American household will help families and individuals afford the energy they need during the transition to a clean energy economy and dividends will provide needed economic stimulus,

Therefore the following legislation is hereby enacted:

1. Collection of Carbon Fees/Carbon Fee Trust Fund: Beginning on _________*, impose a carbon fee on all fossil fuels at the point of origin or import. The fee shall be collected by the Internal Revenue Service. The fee on that date shall be $___** per ton of CO2 equivalent emissions and result in equal charges for each ton of CO2 equivalent emissions potential in each type of fuel. The Department of Energy shall propose and promulgate regulations setting forth CO2 equivalent fees for other greenhouse gases including methane**, nitrous oxide**, sulfur hexafluoride**, hydrofluorocarbons (HFCs)** emitted as a byproduct, perfluorocarbons**, and nitrogen trifluoride**. The Internal Revenue Service shall also collect the fees imposed upon the other greenhouse gasses**. All fees are to be placed in the Carbon Fees Trust Fund and be rebated 100% to American households as outlined below.
2. Ensuring that Clean Energy Become Competitive Within a Ten year Time Frame: The yearly increase in carbon fees including other greenhouse gasses, shall be at least $10 per ton of CO2 equivalent each year to ensure that fossil fuel energy loses its competitive price advantage with respect to the clean energy technologies we have today, including, at a minimum, wind, geothermal and industrial solar energy, within 10 years of the date of enactment. Annually the Department of Energy shall determine whether an increase larger than $10 per ton per year is needed to achieve program goals. Yearly price increases of at least $10 per year shall continue until total U.S. CO2-equivalent emissions have been reduced to 10% of U.S. CO2-equivalent emissions in 1990.
3. Equal Per-Person Monthly Dividends Payments: Equal monthly per-person dividend payments shall be made to all American Households (1/2 per child under 18 years old, with a limit of 2 children per family) each month beginning on ____________. The total value of all monthly dividend payments shall represent 100% of the total Carbon Fees collected per month.
4. Border Adjustments: In order to ensure that U.S.-made goods can remain competitive at home and abroad and to provide an additional incentive for international adoptions of carbon fees, Carbon-Fee-Equivalent Tariffs shall be charged for goods entering the U.S. from countries without comparable Carbon Fees/Carbon Pricing. Carbon-Fee-Equivalent Rebates shall be used to reduce the price of exports to such countries and to ensure that U.S. goods can remain competitive in those countries. The Department of Commerce will determine rebate amounts and exemptions if any.
5. Phase Out of Fossil Fuel Subsidies : All existing subsidies of fossil fuels including tax credits, shall be phased out over the ____* years following enactment.
6. Moratorium on New or Expanded Coal-Fired Power Plants: Beginning on the date of enactment, there shall be no new coal-fired power plants permitted, constructed, or operated. There shall also be no expansions in capacity of any existing coal power plants permitted, constructed, or operated. And any previously permitted coal-fired power plants that have not yet been constructed or put into operation prior to the date of enactment shall not be put into operation and shall not be further constructed.
7. Seeking Treaties: The President in consultation with the United States Department of State shall seek treaties with other countries that encourage adoption of programs similar to the ones provided for in this Act to reduce CO2 and other greenhouse gas emissions in other countries.

* Date to be determined by public and legislator willingness to take action.

** Fees to be determined for each constituent forcing agent based on scientifically assessed impact on total positive forcing on a percentage scale.