Reasons to Support The Energy Innovation and Carbon Dividend Act

By Peter Gorski

With their newly elected majority, the Democratic party is finally again in a position to actually govern. Our country faces economic, social, health, and environmental challenges the likes of which we have not seen before. A relatively easy win, and a step toward sustainability, is the energy innovation and carbon dividend act, introduced as HR 763 in the last session.

For those unfamiliar with HR 763, it is a carbon fee and dividend program (CFD). The bill would place a tax on carbon at the source and redistribute that money directly to the American people as a dividend, much like the recent stimulus checks. The policy avoids making the government figure out how to allocate funds from a carbon tax to fight climate change. By increasing the cost of fossil fuels, it would use market forces to push businesses and individuals to invest in carbon neutral options. The tax, placed at the source, makes the fossil fuel industry foot the bill.

A carbon fee and dividend setup also avoids the often regressive taxation results of a regular carbon tax that can provoke public opposition. For example, recent attempts to increase gas taxes in France resulted in widespread protests and civil unrest. Gas taxes, and other carbon taxes, often end up hitting working and poor people hardest. People with higher incomes and greater job autonomy are typically much more capable of adapting their lifestyle to avoid carbon taxes, while those struggling to get by have fewer options and end up facing the greatest increase in cost of living. If anything, the carbon fee would be moderately redistributive, as all citizens would get an equal share of the dividend.

Crucially, CFD also would place tariffs on imported products from countries that don’t have similar carbon fees and give rebates to exported products from countries that do. The idea here would be to avoid a race to the bottom where manufacturers and businesses move to countries where they can pollute freely due to lack of regulation. Climate policy that places US manufacturing and industry at a disadvantage on the global stage has little chance of passing through this Congress, with a Democratic party containing many members very cozy with corporate interests.

If the Democrats want to tell the people to believe in science, this policy makes sense. An in-depth study by Regional Economic Models Inc (REMI), an organization founded in 1980 which has previously advised both policy-makers and fossil fuel corporations, shows that a CFD policy over 20 years would reduce emissions to 50% of 1990 levels, create close to 3 million jobs, and save over 200,000 lives. A CFD encourages investment in other power sources by making the cost of fossil fuels higher than alternatives, resulting in ripple effects across all aspects of society.

An uncontroversial bill for a divided Democratic party

The reality is that we do not have 20 years to reach 50% of the 1990 levels of carbon emissions. We are already living in the anthropocene, an unpredictable new geological epoch created by human activity. The permafrost in Siberia is melting, releasing massive amounts of methane. Arctic ice is melting and the area is experiencing record setting heat. And through it all, with brief exceptions due to Covid-19 halting parts of the world economy, human greenhouse gas emissions and electricity demands have increased, showing no signs of tapering off.

Carbon Fee and Dividend also has decent bipartisan support, thanks in large part to Citizens Climate Lobby, or CCL. CCL is the largest volunteer based lobby in the country, and has been advocating for CFD for over a decade. Boasting over 600 chapters in the US (including La Crosse), and over 180,000 members globally, the group works to build relationships with every politician in office, regardless of association, to get support for CFD. CCL is focused on one policy and one policy only. As with all environment and climate oriented groups, CCL certainly skews left overall, but they are not without right-leaning and Republican members.

A CFD is not a silver bullet solution to climate change. Climate change will be the defining issue for generations of human beings as we grapple with sustaining a livable environment. It will require revolutionary changes in the way we live, eat, travel, produce power, farm, reproduce, dress ourselves. The Green New Deal does an excellent job of spelling out the dire need for change to not only sustain a livable planet, but  drastically change the way our economy functions to stop and reverse extreme income inequality. I hope that congress passes a Green New Deal and continues to build on the foundation that it lays. A CFD can be a crucial first step in legislating the GND. CFD is a market-based solution. It doesn’t challenge basic economic assumptions broadly shared by Democratic politicians. It encourages them.

The reality is that the Democratic party is deeply divided when it comes to the Green New Deal. It is a party split between avowed left wing representatives like The Squad, dedicated Blue Dog centrists like our own district’s Ron Kind, and right-wing extremists like Joe Manchin who frankly belong across the aisle. Joe Biden’s primary and general election victories have empowered the center. Biden’s recent behavior to the left broadly does not look conciliatory. Comprehensive, systemic change is still out of reach with a party that is resistant to backing widely popular policies like Medicare For All. While struggle continues to change the Democratic party from both inside and out, CFD is a policy that can be backed by Democrats currently in office across the ideological spectrum.

A CFD, and climate change policy in general, requires our politicians to stare down the fossil fuel industry. It will still be a fight to get the bill past fossil fuel shills like Manchin. In a country where big business often writes the legislation that our representatives pass, this is indeed a challenge. But if Democrats claim to believe in science and have any plan to govern beyond pointing to the despicable antics of their opposition, is a market based first step toward a habitable future for human beings asking too much?

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Email questions to Top image credit: A U.S. Department of Defense image of Flooding on the Mississippi River in Illinois.