Benefits of Carbon

Studies on the effects and benefits of the Carbon Fee and Dividend policy have been done by several independent organizations.  All project rapid climate pollution reductions and many co-benefits for our health, low- and middle-income family budgets, and jobs.

The benefits include:

Kaufman, et al, Columbia University

Quotes from this independent study of the federal carbon fee and dividend bill, the Energy Innovation and Carbon Dividend Act (EICDA):

The impact on the finances of U.S. households 

Kevin Ummel, Greenspace Analytics 

University of Pennsylvania

This study of the impacts of the Energy Innovation and Carbon Dividend Act on various demographic groups found that direct economic gains are concentrated among those considered most vulnerable within our society:  those with lower incomes, the youngest and oldest, and minorities.  

The highly progressive effect comes from charging fossil fuel producers for their climate pollution and returning the proceeds to everyone on an equal basis.  This bipartisan approach is not a social policy of income redistribution, it simply creates a more efficient energy market and compensates people equally for damages from climate pollution.

See the Household Impact Study Summary for details.

Regional Economic Modeling Inc. (REMI) and Synapse report on the Carbon Fee and Dividend Policy

This 20-year study on the results of the Carbon Fee and Dividend policy found it creates jobs, grows the economy, saves lives, and makes Americans richer.  It does so while efficiently reducing CO2 emissions by over 50% in twenty years.

Some of the benefits identified in the first ten years for the USA:

See the REMI National Summary and REMI Regional Summary for details.

US Treasury, Office of Tax Analysis

Treasury Dept analysis of equal distribution of carbon fees to all households @ $49/t CO2 Each household with 2 adults and 2 children would receive ~$2,600 annually

This study compares varies revenue recycling options and concludes a full 100% rebate of all the money collected (minus administration costs) is the most beneficial to families, particularly those on the lower side of the income scale.  While it finds a corporate tax swap would be the most economically efficient, the difference between that and a household rebate is negligible, and the regressivity of a corporate tax swap would be significant.  In the case of a household rebate, the bottom 10% of families by income would get 8.9% more spending money from a per-capita equally rebated $49 per ton of CO2 emissions fee on fossil fuels.

Nature Climate Change, November 29, 2021.

Mark Budolfson, et. al

This study finds Carbon Fee and Dividend would lift 1.6 million Americans out of poverty by 2030:

The full report is available here.

The greenhouse gas pollution-reducing power of cash-back carbon pricing can be seen in the expected results.

This graph provides a comparison of the expected emissions reduction results and the required emission reduction targets of the Energy Innovation and Carbon Dividend Act (EICDA) compared with the reductions needed to achieve the IPCC's goals.

Dashed blue line - the estimated emissions reductions based on extending the HR763 carbon price around the world.  A global carbon price is expected to develop in response to the border carbon adjustments.

Green circles - the annual emissions reduction targets specified in EICDA.  If an emissions reduction target is not met, that year's annual carbon fee increase will be $15 (inflation-adjusted) rather than the minimum $10 per ton of CO2 equivalent greenhouse gas emissions.  After the first years, the EPA will be required by Congress to put regulations in place to meet targets if they are not being met.  This fail-safe is not expected to be needed, but addresses the current problems that the Clean Power Plan ran into that have tied regulation of greenhouse gas emissions up in courts.

Source:  CCL analysis.