As long as fossil fuels are the cheapest fuel, they will be burned. Fossil fuels only seem cheap, because the price does not include their full cost to society. Human health costs of pollution are borne by the public, not fossil fuel companies. Growing costs of climate change are also borne directly by the public or by governments, which also means the public.
Fossil fuel prices can be made honest by collecting a rising carbon fee from fossil fuel companies at the domestic sources of oil, gas and coal, i.e., the domestic mines or ports of entry. If the money is distributed 100 percent to the public, an equal amount to each legal resident, it is revenue neutral. Thus it is not a tax and does not make the government bigger.
A carbon fee makes fossil fuels more expensive, allowing clean energies and energy efficiency to compete. Almost two-thirds of the public, people doing better than average in limiting their fossil fuel use, would receive more in their monthly dividend, transferred electronically to their bank account or debit card, than they pay in increased prices.
This carbon “fee & dividend” is progressive. Wealthy people, who travel more and have larger houses, have a large carbon footprint. Given today’s income disparities, this modest change seems beneficial, giving the little guy something to build on, if he uses the dividend wisely.
By the time the fee reaches $100 per ton of carbon dioxide, it will add $1 per gallon at the pump, but the annual dividend will be about $1500, thus $4500 for a family with two or more children (half shares for children). Incidentally, the fee & dividend will provide a big incentive for illegal immigrants to become legal or go home.
Economic studies show that fee & dividend spurs the economy, creates millions of jobs, and increases gross domestic product. It modernizes our energy infrastructure, and our manufacturers will have products to sell worldwide.
A rising carbon fee is the only practical way to phase down global emissions. If the U.S. and China agree to a carbon fee, it can become near global. Participating nations would place a border duty on products from non-participating nations and give fee rebates to domestic manufacturers exporting to the latter nations.
Citizens Climate Lobby, which now has 265 chapters in the U.S., and I have proposed fee & dividend to numerous politicians. Liberals tend to say “let’s use the fee for social programs or invest it in solar panels.” Bad idea. Let the market choose among technologies and efficiency. Conservatives say “let’s use the fee to reduce taxes,” usually specific taxes rich people abhor.
Tell both parties “thank you very much, but we have uses for our money.”
[ed. note: We sure do – for getting ourselves well out of being trapped using fossil fuels for everything we drive, purchase, even eat!]
—James E. Hansen, NASA (retired)