The Carbon Cash-Back Solution

The IMF, World Bank, IPCC, OECD, World Economic Forum, and nearly all US economists say carbon pricing is the most powerful tool to reduce climate pollution.

When pollution is free we get too much of it. We can put a price on climate pollution at the source (coal mine, oil and gas well head, or port of entry) to reduce it efficiently, and rebate all the money collected (net) to all households equally to protect family budgets during the transition to a clean energy economy. Economists agree this is the most cost-effective and fair way to address the main cause of climate change. Border carbon adjustments will protect US jobs and push our carbon price around the world, making this a global climate solution. More is also needed, but carbon cash-back is our best first step at addressing climate change.

Over 3,500 US economists agree the cheapest and fairest way to reduce climate pollution is:

1) Put a price on carbon emissions at the source,

2) Rebate all the money collected to all households equally, and

3) Add the carbon price to imports and remove it from exports in trade with countries that allow free pollution.

Carbon Pricing Explained with Chickens...

This video explains why charging fossil fuel producers and importers a carbon fee is an efficient and comprehensive way to reduce climate pollution. But it ends with a good question: "Who's willing to stomach the cost?"

Not us! We can protect household budgets when we fix the failure of the market to account for the costs of using fossil fuels with the carbon cash-back approach.

The Carbon Cash-Back solution is our best first step to reduce the main cause of climate change.

Here's why:

Putting a price on carbon emissions from fossil fuels is the most cost-effective way to reduce climate pollution. We can do it by charging fossil fuel producers a steadily increasing fee based on the carbon in their products (coal, oil, and natural gas).

The fairest thing to do with the money collected is to give all of it to all households equally - to compensate people for the harms being done to them by the pollution. This cash-back dividend also protects household budgets from the temporarily higher energy prices.

This cash-back solution is also known as Carbon Fee and Dividend.

Most families will receive more money in their monthly cash-back dividend than they will pay in higher prices. Low-income households will come out the farthest ahead.

See how your family does with the Carbon Dividend Calculator.

Border carbon adjustments will protect US jobs and businesses, and strongly incentivize other countries to match our carbon price. That will drive global emissions down as we need for our own safety.

Independent studies have found many additional co-benefits from this solution.

Example Bills

The Carbon Cash-back bill (H.B. 735) will put our state on an efficient path to a clean energy future while protecting households and preparing NH towns and businesses for the future.

HB 735 Info sheet

The Energy Innovation and Carbon Dividend Act (H.R. 763) is effective at reducing US and global emissions, good for families, good for jobs, protects businesses, and has bipartisan support.

HR 763 Info sheet

Do we need both the state and federal bills? No, we don't, at least not at the same time. But the earlier we get started the better. The state bill can be done faster, will help spur Congress to act, and will give New Hampshire a competitive advantage by efficiently reducing our state's carbon footprint ahead of a national carbon price.

The state bill will send a clear price signal to local investors and businesses to focus on energy efficiency and producing the clean energy solutions that are growing in demand around the world as countries work to meet their Paris Accord emissions reductions. It will also incentivize local businesses, municipalities, and citizens to favor those solutions.

Reducing our state's carbon footprint now will make New Hampshire more competitive compared with other states and countries when the federal bill becomes law and everyone pays for pollution.

When the federal policy passes into law, it will gradually replace the state policy. The federal law uses border carbon adjustments to strongly incentivize all other countries to match our carbon price. This will accelerate global demand for clean energy solutions. The net effect will be to make New Hampshire instantly more competitive because of our reduced carbon footprint compared to other states and countries, and we will reap the rewards of that head-start for decades.

Who says put a cash-back price on carbon?

Nearly everyone who's looked into it.

We get the best solutions when both parties work together to address our biggest challenges.

Border carbon adjustments give this climate solution a global reach.

Many US Business groups, Environmental groups, and Community groups are calling for cash-back carbon pricing.

Who Has Already Put a Price on Carbon?

Forty-six countries are already pricing carbon, including Canada, Mexico, the United Kingdom, Germany, Japan, and China. The rest of the world is not waiting for us.

A few countries will soon claim the lead in producing the clean energy solutions that will be used in the global transition to a clean energy economy in the next few decades. Those with meaningful carbon prices are the most likely to become the global energy solution providers of the 21st century.

See the World Bank's 2020 State and Trends of Carbon Pricing report for the rate of adoption and carbon pricing details:

  • Figure 2.2  - Share of global emissions covered by carbon pricing initiatives (ETS and carbon tax)

  • Figure 2.4  - Carbon price and emissions coverage of implemented carbon pricing initiatives

Many groups across the US are calling for carbon pricing.

We know the right carbon price: $100/tCO2 by 2030

A recent study in Nature further supports the prices recommended by the groups listed at the top of this page. From that study:

For a 2050 net-zero CO2 emission target, prices are US$34 to US$64 per metric ton in 2025 and US$77 to US$124 in 2030. These results are most influenced by assumptions about complementary policies and oil prices.

These prices are achievable when we rebate all the money collected back to households on an equal basis each month.

We also know other complimentary policies are needed.

We have no time to waste for our climate - or for our economic future.

New Hampshire will never be a fossil fuel producer, but we can become a clean energy supplier to the world and more competitive overall... if we get started right now!

See the En-ROADS climate policy modeling tool from MIT and Climate Interactive to compare the relative effectiveness of different policy options and identify complementary and redundant policies. Carbon pricing is our most powerful emissions reduction tool.