Page Tag: Deeper Dive
A Carbon Fee
Can Speed Deployment
Developing innovate technologies is key to solving climate change. But we also need to ensure new, low-carbon technologies are rolled out across the economy.
History shows that deployment of new
innovations isn’t always quick or automatic.
Take the invention of the automobile: it took 30 years to replace
the horse in the U.S. transportation system.
Without some sort of a market pull, even the most
promising climate solutions might stay on the sidelines,
slowing our efforts to address climate change.
The government is a large investor in research and development that has the potential to create innovative breakthroughs for climate and energy:
In 2019, the U.S. Department of Energy spent $14 billion on R&D.
Total federal spending on non-health R&D topped $60 billion that year, including both direct spending and tax breaks for companies’ own R&D efforts.
The private sector invests more than 4x as much every year.
To get a return on this investment for the
environment and the economy, we need to see the
best technologies brought to market–and fast.
So, how do we ensure climate technologies
quickly find their place in the economy?
There are essentialy three policy tools:
Subsidies to cut the cost of technologies
Regulations to mandate the use of technologies
An economy-wide carbon price to create a market incentive for technologies
Of these three tools, an economy-wide carbon
fee is the only one that can achieve the rapid uptake of carbon-
efficient technologies at scale, across sectors.
A carbon fee…
Offers a price advantage
solutions that is stable
to be effective
solutions across the
economy, not just
in certain sectors
A carbon price is the best tool we have for
expediting the deployment of low-carbon technologies
How Carbon Dividends
U.S. climate policy should reward our
manufacturers for doing the right thing.
Under today’s trade rules, U.S. manufacturers get no credit for their lower carbon operations compared to many overseas competitors.
When low-cost goods made with high emissions come into our market, it undercuts U.S. manufacturers who have made investments to cut emissions. For example, when steel rebar is produced in America to reinforce concrete, it typically generates less than a quarter of the carbon emissions per ton than rebar manufactured elsewhere in the world.
Yet our steelmakers are forced to compete against many producers overseas who operate with fewer environmental standards. Our manufacturers shouldn’t be penalized for being so clean.
America already has a significant carbon advantage: it produces goods with far fewer emissions than its major trading partners. We just need to unlock it.
A border carbon adjustment (BCA) charges the same domestic U.S. carbon fee on imports at the border, so U.S. manufacturers operate on a level playing field.
U.S. manufacturers receive a rebate for any carbon fees they paid when they export goods out of the country.
The U.S. economy is 44% more carbon-efficient than the world average. It is 3x more carbon-efficient than that of China and nearly 4x as efficient as India. We should get credit for it.
A BCA backed by an economy-wide carbon fee rewards U.S. manufacturers for their efficiency and gives them the incentive to build on it.
America’s carbon advantage extends to a range of U.S. sectors.
When U.S. manufactures outcompete less efficient global producers, they grow and create jobs.
We invite you to learn more
Capture and Storage
The carbon dividends plan will boost the incentive to capture and store carbon emissions from power plants and industrial facilities, an activity that is widely seen as critical for meeting climate goals.
HERE’S HOW IT WORKS:
Absent a federal incentive, it is not economic for companies to capture and store the carbon emissions from their industrial processes. They would lose money by doing so.
To scale up this key climate technology, an existing federal program offers incentives, known as section 45Q tax credits, to businesses that capture and store carbon emissions underground. A business gets up to $50 for each ton of CO2 that it sequesters.
The carbon dividends plan introduces a carbon price at $43 per ton of CO2 that rises 5% every year. Activities that qualify for the 45Q tax credit would also qualify for a rebate under the carbon dividends plan.
By combining these incentives, we can accelerate the deployment and commercialization of carbon capture. This technology holds great promise for being exported around the world–to the benefit of the U.S. economy and the climate.
A carbon fee rebate provides an enduring and predictable incentive structure that will improve the long-term prospects for this climate-enhancing activity.
As the carbon fee rises each year, the incentive to capture and store carbon emissions also grows.
Eventually, the carbon fee could replace the tax credit altogether, establishing a permanent incentive that doesn’t need to be reauthorized by Congress.
For example, the combined incentive (45Q tax credit + carbon fee rebate) could be capped at $110 per ton of CO2. Once the carbon fee exceeds $110 per ton of CO2, businesses would still get rebated the full amount of the carbon fee.
A Rising Incentive to Capture and Sequester Carbon
(45Q Tax Credit + Carbon Price)
The Case for a
Why a climate policy needs broad support.
Americans want a bipartisan solution.
When Americans have faced great challenges in the past, we have rallied around solutions. The scale and speed of climate change requires that Americans come together in support of a lasting and effective policy.
A consensus climate solution is within our reach. Polls show that broad majorities of the public, including voters of both parties, want federal action to address climate change.
Voters say they are more concerned about climate change
Voters want any national climate solution to be bipartisan
Source: Morning Consult
Why carbon dividends is the
bipartisan climate solution
A carbon fee harnesses market forces to quickly slash emissions across the entire economy. It’s a free market approach with a dramatic environmental impact.
Quarterly dividends payments reward all Americans for reducing emissions. The lowest-earning 8 out of 10 households, on average, come out financially ahead with this plan.
Border carbon adjustments offer an effective strategy for getting other major economies to follow our lead, while creating an incentive for investments in job growth here in the United States.
No other climate policy has united such a broad set of stakeholders or holds such strong bipartisan appeal.
Who supports the
carbon dividends plan:
Republicans Under 40
Source: Morning Consult
How Carbon Dividends
A carbon fee is unique among climate policy approaches in that it generates revenue that can be returned to citizens, investing all Americans in a clean energy future.
With the carbon dividends plan:
All the revenue netted from the carbon fee is returned to Americans in quarterly payments. A family of four will receive about $2,000 a year.
Nationwide, household disposable income increases.
The vast majority of families come out financially ahead with this plan, collecting more in dividends than they pay out in increased energy costs.
Lower-income households come out most ahead, seeing a larger proportional boost in their spending power.
Nationwide: 8 in 10 Deciles Come Out Ahead
Source: Oxford Economics
The Environmental Ambition of
the Carbon Dividends Plan
Nothing would do more to accelerate innovation and invest all citizens in a clean energy future than an economy-wide carbon fee with corresponding dividends for the American people.
The Climate Leadership Council’s proposed economy-wide carbon price, starting at $43 per ton, would cut U.S. carbon emissions in half by 2035 all on its own. When paired with other commonly discussed policies like efficiency standards and nature-based investments, it can cut carbon emissions by 50% or more by 2030.
PROJECTED EMISSIONS IMPACT OF THE
COUNCIL’S $43/TON CARBON FEE
Fast: This policy will achieve steep emissions cuts in its first year. The faster we cut emissions, the more we slow climate change and prevent damage to ecosystems and human health.
Reliable: People can feel confident that this policy will achieve its emissions targets. The carbon fee is backed up by an emissions assurance mechanism that will kick in to increase the fee faster if emissions goals are not met.
Global: This plan reaches beyond America’s shores to hold other countries accountable for their emissions. Through a system of border carbon adjustments, it leverages the American consumer to promote clean energy around the world.
Amplifies all other climate policies: Whether you want to promote electric vehicles, carbon capture and sequestration, battery storage, renewables, nuclear, or any other low-carbon solution, a price on carbon will make it easier and cheaper.
Helps communities: This plan will create healthier communities as we protect the climate. It will cut some of the most common air pollutants by as much as half.