Thinking about Carbon Fee and Rebate

By John Majercak, CET president

Last week, Climate Action Now organized a panel to discuss the Carbon Fee and Rebate, a program that would tax fossil fuel suppliers and return all revenues to households and businesses. The event was held at Amherst College.

We were glad to co-sponsor this panel and learn more about the benefits of putting a fair price on carbon. A fair price would include the environmental cost of adding carbon to the atmosphere, and that additional cost would create incentives for us to develop cleaner energy alternatives!

The panelists included Ellen Story, MA State Rep. from Amherst, Pelham, and Granby; Tom Conroy, MA State Rep. from Wayland who co-sponsored last year’s attempt to pass a carbon tax bill; Dan Gatti, Executive Director of Climate XChange, the group spearheading a broad coalition organizing to support this legislation; Professor James Boyce, UMass Economics Department, a well-known expert on the policy; and Rev. Margaret Bullit-Jonas, Missioner for Creation Care in the Diocese of Western Massachusetts and Board member of the Better Future Project.

There are several good ways to implement a fair price on carbon that end up returning all the monies collected back to the people who collectively own our atmosphere. Some options include reduced income taxes, increased tax credits, or even just a simple dividend check.

Professor James Boyce, of the UMass Economics Department, helped the audience understand the concept with this example:

There is a company in California that has 1000 employees but only 500 parking spaces. Everyone collectively owns the right to park there, but there is limited capacity. So the company decided to charge employees to park there. At the end of each month, all the money collected in parking fees is divided equally among the 1000 people. Each receives a dividend check for the same amount, regardless of who parked how many times etc.

Some people drive their own car alone and pay to park every day. At the end of the month they end up with higher costs because the price they pay to park is more than the dividend check.

Others carpool and share the cost of parking in one space among several people. They break even since the cost of sharing the parking is equal to the dividend check they get.

Finally, others decide to take the bus or ride their bike and don’t park at all and therefore pay no parking fee. They end up better off financially because they still get the dividend but have no parking cost.

Now, instead of parking a car imagine the same system for the right to “park” carbon in our atmosphere. Get it?  Let us know what you think!

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