We need to save something like 1300 billion tonnes of emissions of CO2 equivalent between now and 2050 to ensure global temperature stays within the ‘safe’ limit of 2 degrees warming. Leaders will be meeting meeting in Paris next December to reach an international agreement on tackling climate change but they aren’t currently bringing measures to the table which are expected to deliver this level of impact. (1)
Individual and community action to reduce emissions is a great way to show that a low carbon future is possible, but global emissions continue to increase. If we’re going to bring under control and reduce global emissions at anything like the scale and speed required we need to be pushing for big structural solutions.
This is where carbon pricing comes in.
Citizens’ Climate Lobby has been lobbying US congress to put in place a fully redistributed form of carbon pricing called Fee and Dividend since 2007. There is now an international network of 200+ CCL groups campaigning for Fee and Dividend in countries around the world. CCL’s Pathway to Paris project aims to strengthen this coalition and work to put carbon pricing centre stage at the Paris COP next December.
What is Fee and Dividend?
CCL’s proposal is this:
– A fee is placed on the CO2 content of fossil fuels. This fee is levied at the mine, well, or port of entry. The fee starts at a low level and rises steadily over time.
– The revenue from this carbon fee is redistributed to citizens. This means that households are protected from the financial impact of the transition to a low-carbon economy.
– Border adjustments ensure fairness and competition. Countries with fee and dividend can charge a tariff on imports from countries which aren’t pricing carbon in order to ensure a level playing field for goods in the domestic market.
– It’s good for the climate AND the economy. CCL’s research shows that carbon fee and dividend promotes economic growth.
Common misconceptions about carbon taxation –
‘It will put up prices for consumers’
Fee and dividend means that the revenue collected through pricing carbon is redistributed to citizens. Yes – energy will cost more and the price of products derived from fossil fuels or that are particularly energy intensive to manufacture will rise. But the redistributed carbon tax revenue means that households will be able to afford the higher prices. And pricing carbon makes less carbon intensive alternatives relatively cheaper, meaning that us consumers have the opportunity to save money by doing the right thing for the planet.
‘It will make our economy less competitive’
Border adjustments are a key feature that makes pricing carbon a viable solution in the global marketplace. By levying an import charge on goods originating in a country without its own domestic carbon price, nations can achieve a level playing field in their domestic market.
Crucially, border adjustments also provide an incentive for countries to put their own carbon price in place. Faced with the choice between paying border adjustments on foreign exports or setting up a domestic carbon price, most countries will choose to put a price on carbon to keep the money in their own economy.
The situation in the UK –
We already have a form of carbon pricing in the UK through the European Union’s Emissions Trading Scheme set up in 2005. The ETS is a ‘cap and trade’ scheme, meaning that an overall limit on emissions is set and then allowances adding up to the cap are provided to the companies regulated by the scheme. Trading permits between companies is a key feature of the scheme. In practice the ETS has been far from perfect. Too many permits were given out early on meaning that the price of emissions has fallen too low to stimulate investment in low-carbon technology or make renewable energy truly competitive. There have also been a number of cases of financial fraud relating to the scheme.
In addition there are some basic issues with the way ‘cap and trade’ schemes work. By setting an overall quota for emissions, cap and trade produces a situation in which any ‘spare’ emissions are there for the taking. If one country does especially well at reducing emissions, another country will make up the difference, negating any extra saving that might have been made. There is also considerable fluctuation in the price of permits. This attracts financial speculation and discourages investment in low carbon alternatives – these investors would much rather see a stable price on carbon.
Problems with the ETS have led some commentators to argue the EU would be better off adopting a straightforward, robust and properly implemented tax on carbon. This is something we’re looking into at CCL UK at the same time as supporting CCL’s work internationally. (2)
I sincerely believe pricing carbon is the most powerful mechanism we have available to galvanise the huge transition we need to make in the next few decades and to to drive the transition away from fossil fuels and towards low-carbon alternatives.
CCL’s aim is to build a massive popular campaign for carbon pricing by “empowering individuals to experience breakthroughs in exercising their personal and political power.”
As James Grant, Former Executive Director of UNICEF, reminds us, “Each of the great social achievements of recent decades has come about not because of government proclamations, but because people organized, made demands, and made it good politics for governments to respond. It is the political will of the people that makes and sustains the political will of governments.”
Contact CCLUK at CCLobbyUK@gmail.com