Frequently Asked Questions

Under this plan, the government would be legally required to return carbon fee revenue to Americans in the form of equal quarterly payments. With a $40 per ton carbon fee, a family of four will receive approximately $2,000 per year in carbon dividends. The vast majority of Americans will receive more in carbon dividends than they pay out in increased energy costs. This aligns, for the first time, the economic interests of ordinary Americans with climate progress.

Economists are virtually unanimous that a carbon fee is the best tool we have to reduce emissions at the scale and speed that is necessary to address climate change. A carbon fee works by sending powerful market signals throughout the economy, steering businesses and consumers toward a low carbon future. If implemented in 2023, this plan’s gradually rising carbon fee starting at $40/ton will cut U.S. carbon emissions in half by 2035. If emissions targets aren’t met, a safeguard mechanism would kick in to increase the carbon fee faster and get emissions reductions back on track.

A rising carbon fee is the best way to jumpstart the innovation we need to address climate change. With an ambitious carbon fee in place, our plan would replace only those regulations that become redundant, such as those governing carbon emissions from power plants. This regulatory streamlining will not affect regulations that address other greenhouse gas emissions, such as methane. It will also leave intact policies that would be complementary to a carbon fee or accomplish additional policy goals, such as CAFE and appliance efficiency standards.

Nothing would do more than a rising price on carbon to spur all facets of clean-tech innovation and increase demand for low-carbon and energy-efficient solutions. This would give American companies the market certainty they need to develop and deploy the next generation of clean technology. Right now, there is broadly assumed that there will be climate policies in place in the future, but little confidence in what the rules will be and how long they will be in place. Our plan would give businesses, investors, and innovators the long-term predictability they need to make clean energy investments with confidence.

In the past, there has been debate about why the U.S. should lead on climate change if China, India, and other high emitting countries don’t cut their own emissions. Our plan addresses this concern through a border carbon adjustment that protects the competitiveness of American businesses and applies market pressure on other nations to do their part or risk losing market share in the U.S. Instituting a system of border carbon adjustments will enhance the competitiveness of more carbon-efficient U.S.-based companies compared to their less efficient counterparts overseas. Equally important, a nationwide carbon fee would encourage technological breakthroughs that the U.S. can export around the world, positioning American as the leader of the next generation of clean energy technologies. This innovation is the key to solving global climate change.

In a market economy, market failures occasionally arise. A nationwide carbon fee corrects the market’s failure to account for the environmental costs of greenhouse gas emissions accumulating in the atmosphere. By sending price signals throughout the economy, it lets the market and consumers, rather than the government, decide on the best ways to decarbonize. Furthermore, low-carbon investments are made by the private sector, not government. In this way, it starts a race to develop the next generation of clean technologies, without giving preference to any particular technology: all are on an equal footing to compete to serve our low-carbon future. Finally, this approach preserves government resources for other priorities and doesn’t grow the federal deficit.

Our plan offers a way to accelerate the innovation we need to power our homes, cars, and factories while decarbonizing the economy. Fossil fuels -which still account for the majority of world energy consumption—will continue to play a role in the world economy for decades to come. But with a carbon price in place, there will be a powerful incentive to start shifting immediately toward energy technologies that emit less carbon. All energy sources and technologies compete on a level playing field with a carbon price in place. Those that are able to adjust and lessen the amount of carbon emitted per unit of energy win in the long run.

To lower emissions over the long haul, a climate solution has to last. And to last, it must maintain broad public support. History shows that policies that are adopted with strong bipartisan support are more likely to stand the test of time.