Cap (not fee) and dividend?

Recently I have been discussing the benefits of Cap and Dividend compared to Fee and Dividend (which many groups say is the best method of reducing our greenhouse gas emissions.) Fee and Dividend was proposed by James Hansen and is being promoted by the Citizens Climate Lobby. Cap and Dividend has received support by Bill McKibben (founder of

Cap and Dividend

Last year a bill was introduced in the US Congress by Maryland Congressman Chris Van Hollen (The Healthy Climate and Family Security Act of 2015) in support of Cap and Dividend. It was gaining support in Congress and from grassroots organizations across the country (a partial list of some organizations below.)

Here is a summary of the bill:

This bill amends the Internal Revenue Code to require the Department of the Treasury to establish a carbon trading program that caps the emissions of carbon dioxide (CO2) from crude oil, coal, and natural gas. Beginning in 2017, crude oil refineries, petroleum importers, coal mines, coal importers, and natural gas suppliers or processors must purchase carbon permits equivalent to the amount of CO2 that would be emitted by covered fuels. Treasury will auction these permits to those entities.

This bill establishes a declining cap on the quantity of permits issued to reduce CO2 emissions until 2050 when the permits issued represent an amount 80% below 2005 CO2 emission levels.

Treasury must issue permits for carbon capture and sequestration of CO2 from covered fuels.

This bill provides for the trading or sale of permits between entities, the banking by entities of permits for future years, and the borrowing by Treasury of permits from future years to stabilize permit prices.

Auction proceeds and penalties are returned to U.S. citizens lawfully present in the United States using the Healthy Climate Trust Fund established by this bill.

Treasury must impose fees on the import and pay fees for the export of carbon-intensive goods when the export country does not have equivalent measures to regulate greenhouse gases. Carbon-intensive goods are goods with an increased cost due to the regulation of greenhouse gases.

The Environmental Protection Agency must regulate within 10 years all sources of greenhouse gases that are anthropogenically emitted (caused by human activity). This excludes gases attributable to the production of animals for food.

A Dividend is a fair way of distributing any moneys collected through some form of carbon pricing. But in my opinion a Fee is not going to cause a fast enough reduction in emissions. We need a Cap which is reduced rapidly.

Carbon ‘Fee and Dividend’

Carbon Fee and Dividend has been endorsed by Dr. James Hansen.

A “carbon fee with 100 percent dividend” is required for reversing the growth of atmospheric CO2. The fee, applied to oil, gas and coal at the mine or port of entry, is the fairest and most effective way to reduce emissions and transition to the post fossil fuel era. It would assure that unconventional fossil fuels, such as tar shale and tar sands, stay in the ground, unless an economic method of capturing the CO2 is developed.

The entire fee should be returned to the public, equal shares on a per capita basis (half shares for children up to a maximum of two child-shares per family), deposited monthly in bank accounts. No bureaucracy is needed.

Fee and Dividend (returns fee to the public)

The public can understand this and will accept a fee if it is clearly explained and if 100 percent of the money is returned to the public. Not one dime should go to Washington for politicians to pick winners. No lobbyists need be employed.

The public will take steps to reduce their emissions because they will continually be reminded of the matter by the monthly dividend and by rising fossil fuel costs. It must be clearly explained to the public that the fee rate will continue to increase in the future.

When fuel prices decline, the fee should increase, to retain the incentive for transitioning to the post-fossil-fuel-era. The effect of reduced fossil fuel demand will be lower fossil fuel prices, making the fee a larger and larger portion of energy costs (for fossil fuels only). Thus the country will stop hemorrhaging its wealth to oil-producing states.

Fee and dividend is progressive.

A person with several large cars and a large house will have a fee greatly exceeding the dividend. A family reducing its carbon footprint to less than average will make money. Everyone will have an incentive to reduce their carbon footprint. The dividend will stimulate the economy, spur innovation, and provide money that allows people to purchase low carbon products.

A carbon fee is honest, clear and effective.

It will increase energy prices, but low and middle income people, especially, will find ways to reduce carbon emissions so as to come out ahead. The rate of infrastructure replacement, thus economic activity, can be modulated by how fast the carbon fee rate increases. Effects will permeate society. Food requiring lots of carbon emissions to produce and transport will become more expensive and vice versa, encouraging support of nearby farms as opposed to imports from half way around the world.

Endorsers of the Healthy Climate and Family Security Act:

Public Citizen
Sierra Club
Climate Solutions
Center for Biological Diversity
Chesapeake Climate Action Network
Working Families Party
Clean Air Watch
South Carolina Coastal Conservation League
National Community Action Foundation
National People’s Action
Center for Popular Democracy
2020 Action
Action for the Common Good
ACTION United (Pennsylvania)
American Province of the Society of the Holy Child Jesus’ EcoSpirituality Group
Aytzim: Ecological Judaism
Center for Community Change Action
Earth Care International
Citizens for Global Solutions
Climate Change is Elementary
Climate Protection Campaign
Communities United (Maryland)
Environmental Advocates of New York
Hip Hop Caucus
Interfaith Moral Action on Climate
Montana Environmental Information Center
Neighborhoods Organizing for Change (Minnesota)
Neighbor to Neighbor (Massachusetts)
New Energy Economy
New Jersey Communities United
New Mexico Interfaith Power and Light
Physicians for Social Responsibility – New Mexico
Organic Consumers Association
Organize Now (Florida)
Renewable Taos (New Mexico)
The Shalom Center
The Stella Group, Ltd.
Valley Watch, Inc.