We have two years to avoid climate disaster. A carbon fee and dividend will help.

This article, by Michael Howard of the University of Maine, was originally posted on the Bangor Daily News opinion page on December 18, 2018.

Water from Addicks Reservoir flows into neighborhoods from floodwaters brought on by Tropical Storm Harvey in Houston, August 29, 2017

According to U.N. Secretary General Antonio Guterres the world has only two years to change course and avoid catastrophic climate change. His warning is in response to the report to the United Nations by the Intergovernmental Panel on Climate Change, which found that “limiting global warming to 1.5 degrees C would require ‘rapid and far-reaching’ transitions in land, energy, industry, buildings, transport and cities. Global net human-caused emissions of carbon dioxide (CO2) would need to fall by about 45 percent from 2010 levels by 2030, reaching ‘net zero’ around 2050.”

As President Donald Trump loosens regulations on fossil fuels use and threatens to withdraw from the Paris climate agreement, the odds seem slim that the U.S., the world’s second largest polluter, will respond to these warnings. But there is a glimmer of hope on the horizon.

A bill was just introduced in the U.S. House of Representatives in November, with bipartisan support, that would reduce CO2 emissions by 40 percent in 12 years, and 90 percent by 2050. The Energy Innovation and Carbon Dividend Act (H.R. 7173) plans to impose a fee on carbon fuels at the country’s mines, wells and ports, starting at $15 per metric tonne, and rising by $10 per year (or $15 if emissions targets are not being met).

Unlike a revenue-raising tax, the money from this fee would be returned to citizens in the form of per capita dividends (with half-shares for children), so a family of four could eventually expect to receive $3,456 annually, according to Regional Economic Models Inc. (REMI). Most households would receive more cash in dividends than they would pay in higher fuel costs, while businesses would be incentivized to shift from carbon fuels to renewable energy. REMI estimated in 2014 that such a policy could potentially generate 2.1 million additional jobs over 10 years. There are added health benefits, notably 130,000 lives saved over the next 20 years because of declining air pollution from burning fossil fuels.

Unless you are a fossil fuel company, what’s not to like?

Some worry that a carbon fee will make American companies uncompetitive in the global economy. But the bill accounts for this by imposing a carbon fee on imports from countries that do not themselves employ a carbon fee, insuring that imports cannot underprice American companies. Even more important, the fee will incentivize all U.S. trading partners to impose similar emissions reduction fees on their own producers in order to avoid additional costs. H.R. 7173 also provides a refund to companies that export from the U.S. That may reduce the incentive to cut emissions for those companies, but it should allay concerns about competitiveness.

H.R. 7173 will temporarily remove the authority of the Environmental Protection Agency to regulate CO2 emissions, but will restore it if emissions reduction targets are not met in 10 years. Given the current direction of the EPA, and the bill’s robust annual increases in the fee, this is a worthwhile compromise, because the fee and dividend plan will reduce emissions far more than the Obama administration’s Clean Power Plan would have done.

Some environmentalists favor using the revenue not for dividends but for investing in a “ Green New Deal.” A carbon fee alone may not bring about the transition from fossil fuels fast enough, so this alternative needs to be given serious consideration. However, without a return of revenue as dividends, a carbon fee would be regressive, falling more heavily on poor and working-class families than on the rich. If you think the unfairness of a carbon tax, without a dividend, won’t matter, contemplate the yellow vest movement in France, or the unpopularity of Clinton’s 1993 Btu tax. Ideally, needed infrastructure should be funded from progressive tax revenue, while the revenue from a carbon fee is returned as dividends.

Ultimate passage may take more than the two-year window Guterres stipulates. But the sooner effective legislation can gain popular support, the sooner we can get our country, and the world, on the path toward sustainability. Every citizen needs to become active on this issue. Nothing less than the future of our planet is at stake.

Michael Howard is a professor of philosophy at the University of Maine in Orono. This column reflects his views and expertise and does not speak on behalf of the university. He is a member of the Maine chapter of the national Scholars Strategy Network, which brings together scholars from across the country to address public challenges and their policy implications. Members’ columns appear in the BDN every other week.

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