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California Legislators Want To Tax Carbon, But Give The Revenue To The People

All proceeds would be returned to middle- and low-income Americans.

CREDIT: AP Photo/Rich Pedroncelli
CREDIT: AP Photo/Rich Pedroncelli

When it comes to carbon, California legislators have a clear message for Congress and President Obama: Put a price on it, and give the money back to the people.

On Tuesday, the California State Senate voted to pass AJR 43, a joint resolution urging the federal government to enact a tax on carbon-based fossil fuels. But beyond placing a tax on carbon emissions from fossil fuels, the resolution also asks Congress to create a dividends program that would funnel revenue from the tax back to middle- and low-income households. The California State Assembly passed the resolution on June 30.

“We must leave this planet inhabitable for our children and grandchildren, so we must act now.”

“I am proud to have been able to work on and pass this resolution urging the federal government to adopt a carbon-tax and dividend program,” Assembly member Das Williams (D-Santa Barbara), who introduced the bill, told Citizens’ Climate Lobby. “This is a needed program to reduce CO2 emissions and help mitigate climate change, which has become the biggest moral issue of our age. We must leave this planet inhabitable for our children and grandchildren, so we must act now.”

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The resolution has enjoyed strong support from Citizens’ Climate Lobby, an advocacy organization focused on national policies to address climate change. The group has been lobbying for legislatures to enact carbon fee and dividend policies since 2010.

Job increase with a carbon fee and dividend policy. CREDIT: Citizens’ Climate Lobby
Job increase with a carbon fee and dividend policy. CREDIT: Citizens’ Climate Lobby

In 2014, the group released a report commissioned from Regional Economic Models, Inc. (REMI) showing that a carbon tax with dividend sharing model, starting at $10 per ton of carbon dioxide and increasing by $10 per ton each year, would reduce carbon dioxide emissions 50 percent below 1990 levels in 20 years. Moreover, the economic stimulus generated by the dividend sharing would, over the same period of time, add 2.8 million jobs to the American economy, compared with a business-as-usual scenario.

The resolution comes at a crucial time for climate action in California. The state’s cap-and-trade program faces an uncertain future, as legislators grapple with how to extend the state’s climate policies. On Tuesday, the day that the Senate passed the joint resolution, the state Assembly voted to approve SB32, a bill that requires the government to enact rules that ensure a 40 percent reduction in greenhouse gas emissions compared with 1990 levels by 2030.

That same day, however, auction results from the state’s cap-and-trade system showed that two-thirds of pollution allowances went unsold — a sign that industry might be balking at the uncertain future of California’s market, as legislators still have not extended the cap-and-trade program past 2020. (Neither SB32 nor the joint resolution included language specifically about the cap-and-trade program.) The cap-and-trade program is also suffering from an excess of credits, driven both by a slow recovery from the recession, which has generally curbed economic activity, and other policies meant to limit carbon emissions.

Given the number of climate-deniers in the majority in Congress, it’s highly unlikely that a federal carbon tax could pass in the current political climate. But the idea of a carbon tax has garnered bipartisan support outside of Congress, with both industry and conservatives rhetorically backing the idea. Last year, six oil and gas companies went so far as to write a letter to the chief of the United Nations Framework Convention on Climate Change, arguing that a price on carbon should be “a key element” of an international climate deal (it ultimately did not make it into the agreement signed in Paris).