Much thanks to Gordon Gregory for his recent letter “Dreading summer but HR2307 could help.” HR2307 is the Energy Innovation and Carbon Dividend Act which WILL help. This carbon fee and dividend bill was recently reintroduced into the House of Representatives. As written the plan is based on economic principles and has the support of 3500 U.S. economists.
Knowing that most of us in Far Northern California are fiscally conservative, it is important to understand this concept. The plan does not involve any NEW TAXES! Instead the U.S. government charges a fee to the largest carbon polluters (think big oil, coal, and natural gas companies) based on how much carbon they release into the atmosphere. All the money collected is returned to U.S. families in equal monthly payments. (Yes, all adults get the same amount and all children get one half share!) Economics 101 tells us that if our government charges Shell Oil a fee, they will in turn increase the cost of gas. But the dividends put more money in the pockets of Americans allowing them to pay these increased costs. Households in the bottom three income quintiles come out ahead, getting more money back than they pay out for the increased costs of fossil fuels. Those in the top two quintiles either break even or pay out some relatively small amount. The very richest (with multiple houses, expensive toys, and frequent travel) pay the most.
Each year the fees charged to fossil fuel companies raise a bit. This gradual increase incentivizes the free market to develop cleaner energy at lower costs. And the fossil fuel companies adapt as well, gradually finding new ways to provide clean energy, energy storage, and the like. In a few years clean energy becomes cheaper than gas. The fees stop once we’ve met our targets for carbon pollution reduction. Such an economic-based plan should appeal to those concerned about excessive government spending. It’s not about taxes and it even gives money to the people who most need it as we wean off fossil fuels.