Jim Hansen, NASA's Director of The Goddard Institute, is the most well-known of the proponents of the fee-and-dividend approach to reducing the United States of America's dependence on fossil fuels, and, in the process, the atmospheric concentration of carbon dioxide to 350 parts per million (ppm). It is currently at 389 ppm. Some of the details of the fee-and-dividend approach follow.
Reasons for Carbon Reductions
The main purpose of any carbon reduction program is to reduce the amount of carbon emitted into the atmosphere. Other goals include reducing the world's dependence on fossil fuels and increasing the use of renewable energy sources, such as wind, solar, geothermal, and other alternatives.
Other proposed legislative bills also aim to achieve these goals. Cap-and-trade and carbon sequestration are two of these proposed solutions. Many believe, however, that the fee-and-dividend approach is the only viable program that will have a noticeable effect on both consumers and producers.
Fee-and-Dividend's Point of Entry Fee
The main way of the legislation would affect the behavior of producers is by the government charging a fee on all carbon-based fuels at their point of entry, whether that point be a port, mine, or well. This means that when a carbon-based fuel, such as coal, oil, or gas, is first sold to the USA, a uniform fee is charged in dollars per ton of carbon dioxide in the fuel. Companies would pass this fee on to their customers, which would level the cost of fossil fuels and renewable energy sources.
The Structure of the Dividend Payment
The point of entry fee would be passed on to the public by the government in the form of dividend payments. Hansen suggests that all adults be paid a full "credit," and each child per household (up to a maximum of two children) will receive a half credit.
Those consumers who alter their behavior either by installing alternative energy sources, such as solar, wind, or geothermal, or by reducing their use of fossil fuels through efficiency would benefit the most. They would be able to pocket the difference between the increased cost of fossil fuels and their fossil fuel reductions.
Who Benefits From Fee-And-Dividend?
Besides those who reduce their consumption of carbon-based fuels, the greatest benefactors of the fee-and-dividend plan would be the public. As of now, many of the costs of fossil fuels, such as pollution, diseases, global warming effects, and protecting the sources of fossil fuels militarily, are paid by the public. As the cost of fossil fuels goes up under fee-and-dividend, their use will go down, which will reduce the amount of money the public will have to pay for these services.
Inventors and companies searching for alternatives to fossil fuels will also benefit. Under cap-and-trade the cheap cost of fossil fuels keeps companies from investing in alternative energy sources. Also, since only bare minimum emissions reductions are needed or can be bought under cap-and-trade, these developing technologies will continue to be under-financed.
Under fee-and-dividend, carbon-based fuels will be priced on a level with alternative energies. The public, therefore, will increasingly demand cheaper alternatives to carbon-based fuels, and their demand, in turn, will drive individuals and companies to develop these alternatives.
Sources
The Carbon Fee and Dividend Act. Posted on Citizens Climate Lobby.
Hansen, James. "How To Solve the Climate Problem." The Nation. December 30, 2009.
Hansen, James. Storms of My Grandchildren: The Truth About the Coming Climate Catastrophe and Our Last Chance to Save Humanity. New York: Bloomsbury, USA, 2009.
Reyna, Shaddrah. "Fee and Dividend: A Better Way to Reduce CO2." Blue Planet Green Living, March 9, 2010.
Mary Beth Miller - Mary Beth Miller is the author of two Young Adult novels from Dutton Children's Books, Aimee (2002) and On the Head of a Pin (2006). Some ...
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