Our greatest tool: Why we need a carbon price to meet the Paris Agreement

17MayMay 17, 2018

By Courtney Dyson

In economist’s James K. Boyce’s mind, we are currently facing a tragedy of the commons on the global scale. We have reaped the benefits of fossil fuels over the past centuries without paying for the consequences. The greatest being global warming.

What is Boyce’s solution to this dilemma?

A carbon price. In a recent study called Carbon Pricing: Effectiveness and Equity, Boyce makes the case for a carbon cap-and-dividend. A system which would assign property rights to the “limited capacity of the atmosphere to absorb CO2” and develop a sense of “co-ownership of the gifts of nature”.

The study, published in April by the Political Economy Research Institute at University of Massachusetts Amherst, states numerous times that any carbon pricing mechanisms must be driven by emission targets, the capping of emissions, in order to drive them down, and for any prospect of meeting the goal of the Paris Agreement – keeping global warming below 1.5 – 2 ℃.

However, there are several things to keep in mind in order to ensure that such a policy is both effective and fair.

What should the price be?

Global carbon pricing mechanisms today cover about 20% of fossil fuel emissions. However, they were found to be falling short of their goals due to the prices being too low. Incredibly, after taking into consideration the subsidizing of fossil fuels, the average net carbon price in the world today is minus $8.

This is partly due to that three-fourths of global carbon prices are set below $10 per metric ton of CO2. These prices are well below the recommended level. According to a study (Nordhaus), cited by Boyce, the price required to stay below 2.5 °C warming starts at roughly $230 per metric ton of CO2 in 2020, increasing over time.

This makes the DC price of $20 per metric ton with increases of $10 per ton every year with a cap at $150 in 2032 seem modest. However, our carbon price will be occurring in conjunction with improvements in energy efficiency and an increased renewable energy portfolio. These simultaneous actions assist in bringing down the necessary carbon price.

How do you ensure it is fair?

One concern of increasing pricing to the necessary level to invoke timely change is the impact that will trickle down to ratepayers. This effect was referred to in the study as the “cost pass-through”. Boyce states that this pass-through is “a predictable and desirable feature of carbon pricing” because it signals users to reduce their carbon footprints. The lower your footprint, the less you pay.

Yet, it is important to have complementary mechanisms in place to ensure that ratepayers are not stuck footing the bulk of the bill, instead leaving it to fossil fuel companies – the polluters. Boyce states that this can be achieved by:

substantial share of the carbon rent is rebated to the public as equal per-person dividends, the net impact of the carbon pricing policy turns progressive.

This method and theory will, hopefully soon be put into practice through the Climate and Community Reinvestment Act of D.C. The proposed policy would reinvest a large portion of the revenue raised back to D.C. residents, with portions also allocated into energy efficiency and renewable energy programs and tax cuts for small businesses.

What makes the rebate fair?

It is important that a carbon fee-and-rebate takes into account that every household does not have the same carbon footprint. This is a factor which must be adjusted for when establishing the rebate mechanism. Simply put – those who consume more pay more, and those who consume less pay less. Sound familiar?

One of the best mechanisms we have to meet the goals of the Paris Agreement is carbon pricing. Methods like those studied by Boyce and put into practice by legislation such as the Climate and Community Reinvestment Act of D.C. are tools which are effective in reducing carbon emissions quickly, encouraging innovation and new technologies, and most importantly, done in a manner that is just.

Read the full study below:

Boyce-Ecol-Econ-2018

Courtney Dyson is a Communications Fellow at Chesapeake Climate Action Network.

Image at top by Flickr user Hsing Wei, Crowded, 2009.

We have a (draft) bill.

26AprMay 23, 2018

*NOTE: This is a draft bill from the Put a Price On It DC coalition – the final bill released by the DC Council may differ as it is revised and edited.

Big, exciting news from the #PriceItDC coalition!

After years of organizing and deliberating, the coalition has put together a draft of a bill that would place a fee on carbon pollution and rebate the revenue to DC residents. MANY thanks to the several policy experts, researchers, coalition partners and legislative drafting volunteers who have worked relentlessly to bring the coalition’s vision into reality.

See the bill in full below — click through to see it all!

DC carbon fee_2018_draft

For the visually minded among you, check out this cool graphic showing how the policy would work:

The rally was amazing. Time to say thanks

31Oct

Message from Camila Thorndike, Carbon Pricing Coordinator at the Chesapeake Climate Action Network

Holy moly. Last week, nearly 150 PEOPLE turned out to the Wilson Building to call for a price on carbon in DC. We stood alongside Councilmembers Robert White (At-Large), David Grosso (At-Large), and Charles Allen (Ward 6), as well as labor, faith, and justice advocates, who all gave compelling calls to pass this policy. Our movement is truly breaking ground.

Now, we need to amp up the pressure.

Will you send a quick message to your Councilmember encouraging them to introduce a carbon fee-and-rebate policy? Tell them we can’t wait — it’s time to introduce the Climate and Community Reinvestment Act. You’ll also have the opportunity to say thanks to the Councilmembers who came out to last week’s rally.

On Wednesday, SEIU Local 32BJ member Judith Howell shared how pollution from idling trucks filled her apartment and sickened her lungs that very morning, calling for the carbon rebate to clean up the air. Reverend Kip Banks from the East Washington Heights Baptist Church made us laugh with tributes to Beyoncé’s lyrics “put a ring on it” and shout to put a price on pollution if we love Creation. Mike Tidwell of CCAN urged you and I to make this mission part of our daily life until we win. And of course, our champion Councilmembers all spoke passionately about why they are fighting for a carbon rebate in the District. Then we stormed the building to inspire the rest of the Council!

Want to relive the excitement? Check out the coverage from NPR and teleSUR, and browse this great photo album. And I hope you’ll take a second to read the press release of the Councilmembers’ calls for action and share it with anyone skeptical that we can get this done.

Our vote count estimates are getting mighty exciting. But every one of us needs to push hard until all 13 Councilmembers and Mayor are out there celebrating victory on the front steps.

Take one second right now to send your Councilmembers a message of support for the carbon fee-and-rebate solution.

As NPR reported, “D.C. could become one of the first jurisdictions in the country to put a tax on carbon emissions.” This is because of your focused activism. This is direct democracy in action, my friends–take the high-five and pass it on.

It’s time to advance precedent-setting climate protection and economic justice, right here in the District of Columbia Our proposed carbon fee-and-rebate policy would hold polluters accountable for the costs of climate change, level the playing field for clean energy, and lift up every resident of DC (that’s you!) with frequent carbon rebate checks in your bank account.

Send your Councilmembers a message today! Tell them we can’t wait for strong climate action in D.C.

Thanks for rocking it last week and every day,

Camila

The Climate and Community Reinvestment Act of DC will contribute to a Universal Basic Income

13Oct

The idea that pollution should be taxed isn’t new. But returning the money to the people impacted—in other words, everyone—is a little more novel.

That’s what our proposal would do. We think polluters should pay. Not only will this penalty drive polluters towards cleaner solutions—it’ll help the rest of us deal with the impacts of climate change.

Three-quarters of the revenue from our carbon tax would be returned directly to residents in the form of a quarterly check. It’s particularly important to us that all residents share in the money raised by this tax.

In that way, our work overlaps with the movement for a universal basic income (UBI). What is a UBI, and what does it have to do with the carbon tax? Sarah Glazer explains in a recent article published in CQ Researcher.

A bipartisan idea

UBI has a long history, endorsed by everyone from 19th-century land-tax advocate Henry George to The Wire writer David Simon. Notably, the idea of a universal basic income has supporters on both sides.

Liberals like it because they think everyone should have a basic, decent standard of living—a floor which a UBI can secure. Conservatives like that the cash transfer doesn’t expand the government as much as a welfare program, and gives recipients the freedom to choose how to spend their receipts.

There are important differences in these motivations and their implications for the conception and implementation of a UBI. But interest has been strong enough for politicians to test the idea; experiments in UBI are currently underway in Utrecht, Netherlands; Nairobi, Kenya; and Ontario, Canada.

But one of the best pieces of evidence for the rebate we will offer has a longer history, and is closer to home. The Alaska Permanent Fund sends a check to Alaskans every year. (As you can imagine, it’s very popular.) Their checks, like ours, will be paid for by fossil fuel revenue.

Our proposal goes a step further. It makes polluters pay for the costs they’ve offloaded onto the rest of us—costs like asthma from air pollution, water damage from flooding, and even, as time goes on, possible impacts like higher food prices or lower economic productivity.

What it means to our campaign

The rebate is not a universal basic income, but a partial basic income. The money involved is substantial—enough to change people’s lives, if not enough to live on. A typical DC family can expect $500 in first year of our proposal—enough to pay for food for a month, a movie ticket a week, or (almost) a bus trip a day.

Moreover, we’ve made the choice to send more money to low-income residents and households. While not a feature of all UBI programs, this is in keeping with three key principles of our coalition: the poor have:

Borne the brunt of pollution to date
Will bear the brunt of climate impacts
Are least resourced to deal with both 1) and 2).

It’s also a practical consideration: poorer households must pay a greater share of their income towards energy bills. The higher rebates should shield them if energy companies pass those costs on.

We are excited for the chance to give back to people. Some of the revenue from our proposal will go to green infrastructure investments and local businesses . But the rebate is at the heart of our proposal—it’s democratic, it’s equitable, and it will help people.

That’s what this is all about, right?

Hayden Higgins, DC Divest