A win-win solution that brings tangible benefits to contemporary people while protecting the planet for future generations can expand public support for climate change policies. This is the political intuition behind the Green New Deal, which redefines climate policy as an opportunity to restart the economy and create millions of jobs.The same logic applies to Carbon dividend, A strategy that puts a price on carbon emissions and returns the money directly to people.
The easiest place to implement an economy-wide carbon price is where companies bring fossil fuels into the economy. In tanker ports, pipeline terminals and coal mines, these companies will pay for every ton of carbon dioxide emitted when the fuel is burned. This becomes part of the operating cost and is passed on through the price paid by the consumer. Those who consume more pay more; those who consume less pay less. Dividends pay the income to each resident in equal amounts, just like stimulus checks during the COVID pandemic. Most households receive higher dividends than they pay for fuel. The wealthiest people—they consume more of almost everything, including fossil fuels—will pay more, but they can afford it.
How it works can be illustrated by the analogy of a parking lot. Imagine that 1,000 people are employed in an office building that can only accommodate 300 cars. If everyone can park for free, the result is excess demand and congestion. To avoid this situation, a fee is required to limit the demand for batch capacity. The monthly income from parking fees is equally distributed to everyone who works in the building. Those who take public transportation or bike to work are far ahead: they don’t have to pay for parking, but they still get a share of their income. Carpoolers are more or less balanced. Those who commute to get off work in single-person vehicles every day pay more than they return. Dividends apply the same logic to park carbon in the atmosphere.
The Green New Deal aims to reduce carbon emissions by investing in clean energy infrastructure and energy efficiency. Vehicle electrification, building renovations and similar measures will reduce the demand for fossil fuels. But there is no guarantee that the proposed investment will be sufficient to avoid the instability of the earth’s climate. In order to limit the increase in average surface temperature to 1.5-2 degrees Celsius above pre-industrial levels, the Paris Agreement set a goal that the United States and other major consumers must cut emissions by approximately 90% by the middle of this century. Combined with steps to reduce emissions from other sources and sequester carbon, this allows us to achieve our “net zero” goal.
On an annual basis, this means reducing fossil fuel emissions by 7.5% each year for the next 30 years (mathematics is the magic of compound interest in reverse). This is far beyond what any country has achieved so far. 2005 to 2019, As a result of climate policy and the shift from coal to natural gas power generation driven primarily by the market, emissions from fossil fuel combustion in the United States have fallen by 1.2% annually.The sharp contraction in economic activity triggered by the pandemic last year triggered 11% reduction in emissionsHowever, with this year’s rebound, it is expected that the net decline from 2020 to 2021 will eventually reach 3% per year, which is less than half of that required to stabilize the climate.
The reduced demand for fossil fuels brought about by the Green New Deal will put downward pressure on its prices and at the same time play a counterproductive role in boosting demand. In the most extreme cases, this can lead to “Jevons Paradox,” named after the 19th-century British economist William Stanley Jevons, who observed that an increase in coal combustion efficiency may lead to an increase in coal consumption. The same warning applies to other needs. Side policies, such as automobile fuel economy standards.
Partly for this reason, many economists advocate carbon pricing as another way to reduce the use of fossil fuels. This can be achieved through a carbon tax or quota permit system. Rising fuel prices for businesses and consumers will lead to a decline in short-term demand and stimulate private investment in alternative energy and efficiency, thereby further reducing long-term demand.Today’s carbon price covers About one-fifth Emissions.
But carbon pricing may also not be enough to achieve Paris’ goals. Its effectiveness depends on the price, and the prices we currently see are usually too low to complete the work.Globally, 95% of carbon prices are now less than US$40 per ton of carbon dioxide2. One dollar per ton will increase the price of a gallon of gasoline by about 1 cent, so the price of 40 dollars will increase by about 40 cents.this Gasoline retail price From February to July this year, the increase in the United States exceeded this number. No one believes that this solves the climate crisis.
To ensure that we reach the 7.5% annual emission reduction trajectory required to achieve the Paris target, we must take more steps to keep fossil fuels underground. We need to formulate a policy on the supply side of the equation, setting a hard limit on the total amount of fossil carbon we allow to enter our economy and ultimately into our air-the ceiling drops by 7.5% per year.
The problem with supply-side constraints is that it will almost certainly increase the price of fossil fuels. How much depends on the effect of the accompanying demand-side policies, but in the United States, we can see gasoline prices rise to $5/gallon and further rise in the future. The effect is similar to OPEC’s oil supply cuts in the 1970s, but with one big difference. At that time, the extra money paid by consumers at gas stations went to oil producers. With an upper limit based on climate policy, there are better options, including carbon dividends.
Several bills now being submitted to Congress call for a carbon dividend, including House bill With the support of the grassroots citizen climate lobby, Senate bill Sponsored by Chris Van Hollen of Maryland. None of them are firmly anchored to emission reduction targets based on the Paris targets, because they include an upper limit on the rate of carbon price increases. However, this shortcoming can be remedied by simply eliminating the ceiling.
The carbon dividend does not exclude other climate policies.There are also good reasons for public investment and smart regulations, including rules to ensure improved air quality in the community Disproportionate burden From fossil fuel pollution. The upper limit can be combined with a carbon tax as the reserve price for permit auctions.If other policies are sufficient to reach the emission trajectory, the cap is the best Insurance policy, You do not need to file a claim. If not, the price of carbon generated by keeping fossil fuels underground will bring a return of the carbon dividend here and now.
From a philosophical point of view, the carbon dividend is based on this principle: a gift from nature. In this case, the ability of the atmosphere to absorb emissions is limited, and it belongs to everyone equally and universally, rather than enterprises or governments. Economically, dividends reduce income inequality and bring net income gains to most people. Politically, the dividend has passed the win-win test of a viable climate policy. While bringing benefits today, it also protects the planet for tomorrow’s mankind.
This is an opinion and analysis article; opinions expressed Author or author Not necessarily those Scientific american.