Benefits of the Cash-Back Carbon Fee and Dividend Approach

Studies on the effects and benefits of the Carbon Cash-Back approach have been done by several independent organizations. All project rapid climate pollution reductions and many co-benefits for our health, low income families, and jobs....

Quotes from this independent analysis of the federal carbon fee and dividend bill, the Energy Innovation and Carbon Dividend Act, HR 763:

"A price on carbon is a uniquely cost-effective policy tool because it incentivizes emissions reductions wherever and however they can be achieved at the lowest cost. That is why economists almost universally support putting a price on carbon."

"Economy-wide net GHG emissions reductions of 32–33 percent by 2025 and 36–38 percent by 2030."

"EICDA’s use of revenues for equal carbon dividends creates a highly progressive policy: on average, low- and middle-income households receive more in rebates than they pay out in increased prices of carbon-emitting services and products"

"Sulfur dioxide (SO2) and mercury emissions from the power sector decline by more than 95 percent and emissions of oxides of nitrogen (NOx) decline by about 75 percent by 2030 relative to a current policy scenario."

The biggest take-home from this 20-year study on the results of the Carbon Fee and Dividend policy is that there is no economic argument against the solution. It creates jobs, grows the economy, saves lives, and makes Americans richer. It does so while reducing CO2 emissions by over 50% in twenty years.

Some of the benefits found in the first ten years for the USA:

  • 33% carbon emissions reductions and dropping rapidly
  • 2.1 million jobs created (net)
  • 90,000 premature deaths prevented from reduced pollution
  • $1000 average annual personal income gain (for the New England region)

See the REMI National Summary and REMI Regional Summary for details.

This first-year study on the impacts of Carbon Fee and Dividend on various demographic groups found that direct economic gains are concentrated among those considered “most vulnerable” within our society: those with lower incomes, the youngest and oldest, and minorities.

Since the Dividend formula is not means-tested in any way, this effect stems simply from charging for pollution and returning proceeds equally per person; not any type of redistribution.

Methodology for Analyzing a Carbon Tax

This study of the economic impact of a fully-rebated carbon fee of $49 per ton CO2 on fossil fuel production identified a strongly progressive result: the lowest income decile would experience an 8.9% increase in average after-tax income while the top income decile would only experience a 1% decrease (page 26).

Anyone can come out ahead simply by reducing their carbon footprint to below average.