On January 12th, 2021, the Monadnock Sustainability Hub, in partnership with the Keene Clean Energy Team, hosted a panel on the Carbon Cash-Back solution. Also known as Carbon Fee and Dividend policy—or as proposed in the United States House of Representatives, the Energy Innovation and Carbon Dividend Act—this policy addresses our nation’s harmful carbon emissions by putting a price on fossil fuels and returning revenue to American households.
Watch a recording of the panel below to learn more about Carbon Fee & Dividend. Q & A starts at minute 17:40. There were many great questions asked during Q & A, but unfortunately due to limited time, our panelists were unable to answer all of them. They’ve since reviewed the unanswered questions—continue reading to find their answers!
Panel Recording: The Climate Solution That Pays Families: A Local Conversation on A National Policy
Continued Q & A
Q: It seems that the success of a Carbon Fee & Dividend plan is highly dependent on having ample renewable energy to maintain US society & economy. Can renewable energy be developed to meet current and growing demands? If not, why not direct carbon fees towards increasing renewable energy generation?
A: Yes, clean energy is accelerating rapidly worldwide. Even with minimal support in the United States, solar & wind are already less expensive than fossil energy in much of the world. Storage will further accelerate wind and solar. The carbon fee will spur renewable energy at a faster rate (in part because increased fossil fuel prices will incentivise further innovation and development of cost-effective renewable energy projects). If additional government support for renewable energy is needed, that support should come from other government funds, not from dividends, as the dividend is key to ensuring that American households are not negatively impacted by the increase of fossil fuel prices. Note that the Carbon Fee & Dividend (aka. Carbon Cash-Back) plan won’t stop our use of fossil fuels immediately. Instead, the transition will be gradual, providing plenty of time for renewable energy to replace fossil fuels. In addition, electrification and efficiency improvements (which will be motivated by the rising prices of fossil fuels) will mean that much less total energy will be required. I recommend testing the consequences of electrification and energy efficiency using the EN-ROADS tool.
Q: What will happen to people who work in the fossil fuel industries and will start to lose their jobs?
A: Prior to the pandemic there were over 200,000 solar jobs across 50 states and under 75,000 coal jobs in only about 15 states. Carbon Fee and Dividend (aka. Carbon Cash-Back) legislation will create even more jobs. In addition, there should be a large, effective Federal job retraining program. This should be paid for from other sources of government revenue, not from carbon fees. This policy will gain bipartisan support only if 100% of the fees are returned to citizens and legal residents, without means testing or other conditions. Carbon Fee and Dividend is a foundational policy to shift our economy—other policies will also be required to effectively address the climate crisis and transition our nation (and world) to clean & renewable energy, as the En-ROADS simulator lets you explore.
Q: What’s the motivation to move away from fossil fuels?
A: Economically, there are two motives. First is the motivation that we all experience when we shop for the best bargain. We’ll buy the less expensive product, if it will serve our needs. This especially reins true if we know fossil fuels will get more expensive each year. Second is the fact that the money spent on fossil fuels leaves our state (and to an extent our national) economy. New Hampshire imports its fossil fuels; we send $3.9 billion dollars to other states and countries each year to pay for our fossil fuels (we don’t produce them here). If all that money stayed in New Hampshire, us New Hampshire citizens would all be better off. Through transitioning away from fossil fuels and to renewable and clean energy, we would be able to produce much more of our energy locally, meaning more of our energy dollars would stay in our state economy (not to mention we would be creating local jobs as a result!). The same logic applies on a national scale — it is a way to reduce the money leaving our national economy to pay for imported energy. Healthwise, the motivation is to live in a cleaner environment. Pollution from fossil fuels affects people in New Hampshire, even though our air and water are cleaner than that in most of the rest of the country.
Q: Will there still be strict emission limits included in this bill as well?
A: Yes, the bill contains provisions to make sure that emissions decrease at a rate consistent with net zero by 2050. The progress we’re making in reducing emissions will be continually monitored. If progress seems too slow, the annual carbon fee increment will be increased. In addition, the whole policy and its effects will be reviewed at 10-year intervals by the National Academy of Sciences, and the Academy will make recommendations for modification of the policy, if the Academy thinks emissions are continuing at too high a rate.
Q: Small businesses are already hurting economically right now. Can you speak again as to how this bill will affect them?
A: The small businesses in New Hampshire that are most likely to suffer from this policy are those involved in transporting and selling coal, oil, and gas within our state. Hopefully these businesses will figure out that, if they are to survive, they’ll need to change their business models. They’ll have plenty of time to do that, because New Hampshire will continue to rely on fossil fuels, at gradually decreasing levels, for decades to come. Other businesses will incur increased costs as their fuel prices rise, but they’ll be able to deal with those increased costs in two ways. First, they can pass the costs along to their customers (who will be receiving dividends, which, in most cases, will more than cover increased costs). Second, they can choose to reduce their expenses by switching to clean sources of energy, because clean energy prices will not be rising. If they switch to clean energy faster than their competitors do, they’ll gain a price advantage. Smart business!
Also, there will be significant small business opportunities in energy efficiency and clean energy. New Hampshire can retain energy dollars by harvesting solar and wind, particularly offshore, which will be part of the clean energy industrious revolution.
Q: Do we have any of our US Senators and Congresspeople on board?
A: Our Representative, Annie Kuster, is a co-sponsor of the Energy Innovation and Carbon Dividend Act (the act promoting Carbon Cash-Back/ Carbon Fee and Dividend). A similar bill has not yet been introduced into the Senate. We hope that it will be introduced into the new 2021 Senate. Senator Coons, the prime sponsor, has been waiting to find a Republican co-sponsor. Our two Senators, Shaheen and Hassan, have been meeting regularly with Citizens’ Climate Lobby lobbyists (like Marge, John, and Joel), so they’re well educated on the Carbon Cash-Back policy, and they’re both very supportive of Federal action to reduce greenhouse gas emissions. All the same, you can still tell Congress you support Energy Innovation and Carbon Dividend Act by writing a quick digital letter to our representatives via the Citizens’ Climate Lobby website!
Q: Why was the TED talk implying that Republicans were better than Democrats on this matter? To pass this legislation, must we sit down with Republicans and not work with the Democrats?
A: Ted Halstead (the speaker of the featured TED Talk) realized (past tense, because he died recently) that Federal climate mitigation policies are unlikely to last into the future unless they’re bipartisan, with broad support from both Democrats and Republicans. Halstead knew—back when he did the TED talk (and perhaps even more now)—that it’s especially important to persuade reluctant Republicans to think seriously about climate (Democrats already take the issue seriously), in order to create bipartisan support.
Q: How does this compare to the NH Oil Discharge Fee applied to petroleum products imported into New Hampshire?
The carbon fee resembles the oil discharge fee, in the sense that both are applied to fossil fuel importers. However, the resemblance ends there. The funds raised by the oil discharge fee are used for a specific purpose (cleaning up after oil spillage, I believe). None of the income is returned to New Hampshire citizens. Also, the oil discharge fee is small (2¢/gallon) compared to the carbon fees we’re talking about (15¢/gallon to start, increasing yearly by 10¢/gallon). See https://www.salestaxhandbook.com/new-hampshire/gasoline-fuel.
Q: John, you said Carbon Pricing was “better than renewables” — could you clarify?
A: Answer from John: I was referring to reducing global temperatures in the En-ROADS simulator. Because a price on carbon is foundational it reduces emissions most effectively, which lowers the temp in 2100 the most. Carbon pricing will encourage renewables, along with any other federal & state clean energy policies and incentives. In a free market, if we just support renewables, they will grow faster, but, if there’s nothing to slow fossil fuel emissions, then dirty power plants will continue, and we’ll see an abundance of electricity with temps still rising.
Additional answer from Joel: John was reporting results from the EN-ROADS climate policy simulation tool. He and I recommend that you try EN-ROADS, too. You’ll see that a policy of heavily subsidizing renewables, by itself, could be helpful, but it won’t be as effective as a strong carbon price, because, in the absence of a carbon price, the prices of fossil fuels will remain low. In fact, a strong carbon price will incentivize renewables by itself to the same extent as will strong Federal subsidies for renewables, but will reduce fossil fuel use (which is the point) to a much greater extent than direct subsidies for renewables. Strange but true!