The Carbon Cash-Back Solution

When pollution is free we get too much of it.

The IMF, World Bank, IPCC, OECD, World Economic Forum, and nearly all US economists say carbon pricing is our most powerful tool to reduce climate pollution.

Carbon Cash-Back is the best way to price carbon because it is predictable and comprehensive, it protects family budgets and US business competitiveness, and it holds other countries accountable for their pollution.

Carbon Cash-Back rapidly reduces climate pollution by putting a steadily increasing carbon fee on fossil fuel production and imports.   Most families will receive more money each month in their cash-back dividend than they pay in total higher prices.  US businesses will be made more competitive through border carbon adjustments because most other countries pollute more per unit of goods produced than the US.  This trade adjustment will strongly motivate other countries to match the US carbon price, making this a powerful, global climate solution.

Here is the elevator pitch for the policy:  Carbon Fee and Dividend

Carbon Cash-Back will incentivize the energy efficiency, innovation, transition, and drawdown we need.  Additional complimentary policies are also needed, but experts say border-adjusted cash-back carbon pricing is necessary to address climate pollution at the pace and scale we need for our safety.

Over 3,500 US economists agree the cheapest and fairest way to reduce climate pollution is:

1) Charge a steadily increasing carbon fee on fossil fuels at the source (mine, wellhead, and port of entry), 

2) Rebate the money collected to all households on an equal basis each month, and

3) Apply our carbon price on imports and rebate our exporters in trade with countries that allow free pollution.

List of NH Economist Signatories

One of those leading US economists, Professor Charles Wheelan of Dartmouth College, explains the power and benefits of the Carbon Fee and Dividend with Border Carbon Adjustments policy at the federal level.

When asked what policies he would recommend at the state level to help prepare for a federal carbon price, Professor Wheelan answered:  a moderate state carbon price. "It's like giving your own industries a head start". [start at 1:11:06]

Carbon Pricing Explained with Chickens

This video explains why carbon pricing is an efficient and comprehensive way to reduce climate pollution. But it ends with a good question: "Who's willing to stomach the cost?" 

Not us!  We can protect household budgets when we fix the failure of the market to account for the costs of using fossil fuels with Carbon Cash-Back.

The Carbon Cash-Back solution is our best first step to reduce the main cause of climate change. 

Here's why:

Putting a price on carbon emissions from fossil fuels is the most cost-effective, comprehensive way to reduce climate pollution.  We can do this by charging fossil fuel producers a steadily increasing fee based on the carbon in the products they sell (coal, oil, and natural gas).  This sends a price signal throughout the economy to motivate reducing carbon emissions.  A strong carbon price is half of solving the whole problem, and once we do it, the hundred other complementary solutions that are also required will all be much easier to do because everyone and business will be interested in reducing their pollution costs.

The fairest thing to do with the money collected is to give all of it to all households on an equal basis (1 share per adult, ½ share per child)  to compensate everyone for the harm being done to them by the pollution.  This cash-back dividend also protects household budgets from the temporarily higher energy prices, and that lets us put a high-enough price on carbon to do what we need it to do.

This cash-back carbon pricing solution is the Carbon Fee and Dividend policy.

A two-minute video about how Carbon Fee and Dividend (aka Carbon Cash-Back) works.

Most families will receive more money in their monthly cash-back dividend than the total additional amount they pay in trickle-down higher prices.  Low-income households will come out the farthest ahead.

See how your family does with the Carbon Dividend Calculator.

Border carbon adjustments will protect US jobs and businesses from free polluting countries, and strongly encourage other countries to match our carbon price.  That will drive global emissions down as we need for our own safety.

Independent studies have found many additional co-benefits from this solution.

Who says put a cash-back price on carbon?  

Nearly everyone who's looked into it.

We get the best solutions when both parties work together to address our biggest challenges.

State and Federal Bills

New Hampshire's 2023 House Bill HB 372 would have commission a study on the impacts of federal carbon pricing on the citizens, towns, businesses, and state.  Getting local stakeholders together to identify risks and opportunities will help New Hampshire make the most of a clean energy future. 

The Energy Innovation and Carbon Dividend Act is effective at reducing US and global emissions, good for families, good for jobs, and protects US businesses.

Energy Innovation Act Info sheet

Who Has Already Put a Price on Carbon?

World Bank, State and Trends of Carbon Pricing 2023 Report, Figure 5

Seventy-three countries and regions are already pricing carbon, including Canada, Mexico, the EU, the UK, Germany, Japan, Singapore, and China.  The rest of the world is not waiting for us.  Their prices are rising.

A few countries will claim the lead in producing the clean energy solutions for the global transition to a clean energy economy in the next few decades. Those with meaningful carbon prices are the most likely to become the global energy solution providers this century.  

See the World Bank's 2023 State and Trends of Carbon Pricing report for the rate of adoption and carbon pricing details

Canada is using Carbon Fee and Dividend now as the country's back-stop measure, and will reach a carbon price of $135/tCO2 by 2030 [watch 22:57 - 25:52 below].

The EU is implementing a Carbon Border Adjustment Mechanism to charge free-polluting countries its $80/tCO2 carbon price on imports.  Canada and other countries that price carbon are likely to soon join the EU in a border-adjusted "carbon club".

Prime Minister Trudeau:  "[Canada’s carbon price is] going to rise to C$170 a ton by 2030... And the way we did it is we're actually returning more money to the average family than it costs them on average for the carbon price." - Canadian PM Trudeau -

In the last minute of this video, the Director General of the WTO discusses the need for a global carbon price floor - with a higher carbon price in wealthier countries and a lower carbon price in developing countries. -

IMF Proposal for an International Carbon Price Floor Among Large Emitters:

And the UK Prime Minister's Finance Advisor says every country should have a carbon price:

We know the right carbon price:  $100/tCO2 by 2030

A recent study in Nature supports prices in the range recommended by the groups listed at the top of this page.  From the study:

"For a 2050 net-zero CO2 emission target, prices are US$34 to US$64 per metric ton in 2025 and US$77 to US$124 in 2030. These results are most influenced by assumptions about complementary policies and oil prices."

These high prices are achievable when we rebate all the money collected back to households on an equal basis each month to protect family budgets and the economy.  Complimentary policies will make it possible to hold warming to 1.5˚C.

IPCC recommendation:  $135/tCO2 (minimum) by 2030 (SR15 Price of Carbon Emissions).

OECD recommendation:  $147/tCO2 by 2030 (Pg 4: Box 1, Carbon Pricing Benchmarks, #3)

Groups across the US are calling for carbon pricing

Support in Congress

There is growing bipartisan support in Congress for Carbon Cash-Back legislation.  They just need to hear from more of us.  We can make this happen.

We have no time to waste for our climate - or for our economic future

New Hampshire will never be a fossil fuel producer, but we can become a clean energy supplier to the world and more competitive overall... if we get started right now!

See the En-ROADS climate policy modeling tool from MIT and Climate Interactive to compare the relative effectiveness of different climate policy options and to identify complementary and redundant policies.  Carbon pricing is our most powerful emissions reduction tool, and together with complementary policies, it will enable us to hold global warming below 1.5˚C this century if we get started immediately.

The New Hampshire Resolution to Take Action on Climate Pollution warrant article petition is available on the Files page.