Carbon Pricing

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Fee and Dividend Model

Citizen Climate Lobby explains the Basics.

According to the Citizen’s Climate Lobby (CCL) commissioned report on “The Economic, Climate, Fiscal, Power, and Demographic Impact of a National Fee-and-Dividend Carbon Tax” by REMI and Synapse, a Fee & Dividend (F&D) policy based on $10/ton carbon* reduces US emissions to 69% of 1990 levels by 2025, and to 50% by 2035. Additional significant benefits include lives saved and GDP improvements. cumulatively 227,000 American lives would be saved in 20 years under F&D, and over the 20 years considered, GDP is [cumulatively] $1.375 trillion higher than without F&D. See:

"Summary of “The Economic, Climate, Fiscal, Power, and Demographic Impact of a National Fee-and-Dividend Carbon Tax” By REMI and Synapse" - CCL - Danny Richter - August 1, 2014

(* I assume this is per [short] ton [2000 lb] of elemental carbon and not [metric] tonnes [2204.6 lb] of CO2 as is often cited.)

There’s a separate analysis for

  • Regional REMI Summary for the Mountain (MNT) Region (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Wyoming), (MNT-Regional-Summary.pdf)

The study includes the impact of fees and dividends on households, see these pdf documents:

Cap and Trade Model

The Cap and Trade model is designed to reduce CO2 emissions overtime. Industries by regulation are allowed to emit up to a certain amount of CO2 in the form of allowances. Violators are fined. Industries that drawdown their emissions faster can sell or trade their allowances to other 'less fortunate'. Over time caps are reduced.

The Environmental Defense Fund provides some basic information:

How Cap and Trade Works

Carbon Pricing Legislation Comparisons

Several different bills to put a price on carbon and reduce greenhouse gas emissions were introduced in the 116th Congress. The Friends Committee on National Legislation developed a detailed, side-by-side comparison of bills under consideration in the House and Senate. Most if not all follow the Fee and Dividend model.

"Carbon Pricing Legislation Comparisons" - FCNL - August 20, 2019

Some of these tax the consumption of fossil fuels, e.g. gasoline at the pump, some tax the production of fossil fuels at the mine or wellhead. Revenues can be returned to the consumers on a needs basis, or used to fund other social needs. The various formulas/schemas have not yet been determined (as of mid 2020).

Problems with Carbon Pricing

Mark Jaccard, Professor of Resource and Environmental Management at Simon Fraser University as reported by by Thomas Walkom National Affairs Columnist with The [Toronto] Star discussed some pitfalls:

"Why a carbon tax won’t solve climate change" - The Star - Thomas Walkom - Dec. 2, 2019

Other Carbon Pricing Proposals