Whenever I hear a presentation on the carbon fee/dividend plan, it comes off sounding like a plan that would provide a Universal Basic Income derived from oil revenues. It is after all a public resource and perhaps citizens should be getting some revenue from that resource much like the Alaska Permanent Fund derived from oil revenues. The fund has paid an annual dividend since 1982 that has been as high as $2,072 per person, or $8,288 for a family of four.
Still, when something sounds too good to be true, it usually is. I started getting suspicious when I heard the big oil companies were supporting a carbon fee/dividend. The plan would add a fee to fossil fuels based on the CO2 equivalent emissions of fossil fuels. Consumers would pay higher costs on virtually everything because energy is a substantial cost of production for most products. The fee would then be distributed to each citizen offsetting the higher cost. Clearly, it’s not a dividend based on revenue like the Alaska plan. It’s more like a sales tax where the consumer gets a rebate at the end of the year. In theory, low wage earners would get a larger dividend than they pay in fees but I’ve yet to see any actual numbers that would substantiate that theory.
In global markets, the impact becomes much more complicated. Import fees would be imposed to encourage foreign producers to also implement the carbon fee and discourage companies from migrating to no fee regions. American consumers would still pay higher prices for those fees but there would be no dividend as the fees would remain in the country of origin. Oil exports would receive a rebate. That seems to incentivize exporting U.S. oil and allowing consumers to pay the higher cost for foreign oil.
All of this will presumably be balanced out by tariffs and trade agreements. Every product produced would essentially require a carbon fee adjustment in an environment where it may be difficult to determine if it was produced with fossil fuels. I can’t imagine the complexity of that.
The fee would affect the real cost of using fossil fuels and should create incentives for greater efficiency, alternative material sourcing, and renewable energy sources but it is not clear that these alternatives can match the economic growth demands of today’s economic models. That goes to the real problem of projected economic growth that exceeds the foreseeable capacity of the planet. That problem is not being addressed by a recirculating tax rebate plan.
That brings me to what’s in it for the corporate denizens of wealth. The plan they support which of course is the only plan our congress would possibly adopt was drafted by the Climate Leadership Council, that includes a long list of major oil producers like ExxonMobile and BP as well as many other large corporations like GM and Pepsico. Their proposal provides for a carbon tax in lieu of environmental regulations including EPA’s regulatory authority of CO2 emissions, repeal of the Clean Power Plan, and an end to federal and state tort liability for emitters.”
Here the theory goes, that market forces will eliminate the need for these regulations. In an environment of ever-increasing wealth inequality, with congress determining the market forces, I have a pretty clear idea of who the winners and losers will be.