Carbon fee and dividend
Since the adoption of the system in Canada and Switzerland, it has gained increased interest worldwide as a cross-sector and socially just approach to reducing emissions and tackling climate change.
[21] Moreover, the regressive impact of shifting part of the abatement burden southward conflicts with the UNFCCC principle of common but differentiated responsibility and respective capabilities, which explicitly acknowledges that developing countries have less ability to shoulder climate protection measures.
As of July 2022, there were eight jurisdictions globally implementing a form of carbon fee and dividend: Switzerland, Austria and Alberta, Ontario, Manitoba, Saskatchewan, Yukon and British Columbia in Canada.
Switzerland The Swiss carbon tax redistributes around two thirds of its revenue to residents, including children, and to businesses (in proportion to their payroll).
This approach was chosen for practical reasons according to Mildenberger et al. (2022)[25] – health insurance is mandatory for all residents in Switzerland and the same process was already being used to distribute funds from the volatile organic compounds tax.
[25] Mildenberger et al. (2022) note that the dividend aspect of the scheme did not play a prominent role in public debate in the lead up to the referendum, which instead focussed heavily on the costs of the carbon tax.
[25] The Swiss Government has since proposed new amendments to the laws which would maintain the tax rate of CHF 120 per ton of emissions but continue to exclude the transportation sector.
New Brunswick used the scheme from April 2019 to March 2020, but has since implemented its own carbon tax which recycles revenue back into the economy, but not as a dividend to consumers.
[36][37] As of 1 July 2022, the maximum amount an adult (and their partner) can receive is CAD $193.50 annually, paid in quarterly instalments, and $56.50 per child.
*Alberta had its own carbon tax in place in 2019 before switching to the federal system Payments take household size (adults and children) into account.
[42] Citizens' Climate Lobby argues that a fee-and-dividend policy will be easier to adopt and adjust than relatively complicated cap-and-trade or regulatory approaches, enabling a smooth, economically positive transition to a low-carbon energy economy.
[46] A Carbon Dividends plan has been proposed by the Climate Leadership Council,[47] which counts among its members 27 Nobel laureates, 15 Fortune 100 companies, all four past chairs of the Federal Reserve, and over 3000 US economists.
Among those supporting the Climate Leadership Council's Carbon Dividends Plan are Greg Mankiw, Larry Summers, James Baker, Henry Paulson, Ted Halstead, and Ray Dalio.
[citation needed] Inspired by the market-friendly structure of carbon fee and dividend, Republican Congressman Bob Inglis introduced H.R.
Concerned about energy infrastructure as an issue of national security, he supports Fee and Dividend as a reliable means of reducing dependence on foreign oil.
[50] Another bill partly inspired by the Fee and Dividend structure was introduced by Democratic Congressman John B. Larson on July 16, 2015.
It may have difficulty passing in Congress because it would be considered a tax, but if households were to receive an equal share in the form of a dividend then the legislation should properly class as a carbon fee.
The bill would levy a $15 fee per ton of carbon dioxide equivalent which would increase by $10 each year, with all revenue being returned to households.
Several 2020 presidential candidates have publicly shared their support of the fee and dividend policy, including Bernie Sanders,[55] Pete Buttigieg,[56] Andrew Yang,[57] and John Delaney.
[66] Emeritus professor of management Henry Jacoby, formerly of the Massachusetts Institute of Technology, reviewed some of the more common concerns in a Guardian article in January 2021, particularly the stigma of taxation's perceived unpopularity.
