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Answering a critic of carbon fee-and-dividend

Readers of the Times might recall that longtime North Thompson resident Jean Nelson and your editor cycled from Toronto to Ottawa last spring to publicize a petition calling for a Canada-wide referendum on carbon fee-and-dividend.

Carbon fee-and-dividend is a method to help control human-caused climate change. It would put a fee on fossil fuels, similar to a carbon tax, but all the money collected would be returned to individuals as equal dividends.

Dr. James Hansen, in some ways the dean of climate scientists, has advocated for carbon fee-and-dividend for many years. Quite a few top economists agree that carbon fee-and-dividend would be the best and most effective mechanism to control global warming.

Somewhat surprisingly, Hansen has complained bitterly about major environmental groups (what he calls “Big Green”) that not only do not support carbon fee-and-dividend, but that also appear to oppose it.

Carbon Washington, the group that has successfully raised enough signatures to force a referendum on a revenue-neutral carbon tax in that state, has been opposed by a consortium of environmental groups that want the money raised by the carbon tax to go to “green infrastructure” and not to reducing other taxes.

Recently Jean Nelson contacted a prominent B.C. environmentalist who does not support CF&D and asked him why not.

In his reply he said, in part, “… we need as much of the carbon tax income as possible to invest in climate solutions.”

No doubt at least some of the money raised through carbon taxes should be used this way.

However, it is hard to believe that all of it or even a majority should be.

Like it or not, carbon fee-and-dividend is going to have to do most of the heavy lifting.

Here are some arguments against the prominent B.C. environmentalist’s position:

1. CF&D would be more politically acceptable. In order for a price on carbon to have an adequate effect it’s going to have to be pretty high. A reasonable guess would be around $300/tonne carbon dioxide, or 10 times B.C.’s present carbon tax. People will not accept that unless they see some direct benefit coming back to them – a sizeable dividend cheque in the mail.

2. If a carbon tax were several times higher than B.C.’s and all or most of it going into government revenue, governments would become dependent on it as a cash cow. There would be tremendous pressure not to raise the carbon tax so high as to damage the fossil fuel industry. If the revenue were to go out as dividends, on the other hand, we can rely on people to want their cheques to be as big as possible, even if that means wrecking the fossil fuel industry, which is what we want.

3. Governments do not have a good record picking new and innovative technologies. CF&D would create a huge market for alternative energy under a free market system. Inventors would go out, raise capital and, if their ideas are good ones, become successes. This would be preferable to having government committees determine the winners and losers among new ideas.

4. CF&D would directly address the growing economic inequality in Canada and the world. It is hard to see how investing in green infrastructure, etc. would have any effect on economic inequality.

5. CF&D is simple, inexpensive and transparent. All of the alternatives are not.

Why have no major environmental groups endorsed carbon fee-and-dividend?

My suspicion is they do not want to alarm the donors that they rely on for funding. Carbon fee-and-dividend, on the other hand, would be alarmingly disruptive.

The fact is, however, that if a group is not talking about carbon fee-and-dividend then they are not really talking about ways to control human-caused climate change.


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