Carbon Cashback
What if we charged polluters and gave YOU the money?!
When pollution is free, we get too much of it. We can put a price on climate pollution at the source (coal mine, oil or gas well head, or port of entry) to reduce emissions efficiently and rebate the money collected to all households equally to compensate each of us for the damages and costs of that pollution. This cashback dividend will also protect household purchasing power.
Businesses don't receive carbon cashback, so they are incentivized to use energy more efficiently, innovate, and optimize solutions for all of us. They also benefit when consumers have more cash in their pockets. This is the most cost-effective and fair way to address the main cause of climate change.
Our preferred legislation, the Energy Innovation and Carbon Dividend Act (H.R. 2307), was introduced in the U.S. House of Representatives during the 117th Congress and received nearly 100 co-sponsors. We look forward to its reintroduction in the 118th Congress. This bill would be good for families, good for the economy, and effective at reducing carbon emissions. Learn more about the benefits of this approach.
Since Delaware is a leading chicken-producing state, what better way to illustrate carbon pricing than with chickens!
This video explains why charging fossil fuel producers and importers a carbon fee 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 the carbon cashback approach.
By the way, since this video was produced, the number of countries that have put a price on carbon has increased to 47 as of 2022, including China, and the cost of renewable energy sources such as wind and solar has almost reached parity with fossil fuel sources. Of all the world's developed economies (as defined by the United Nations), only the U.S. and Australia do not have some form of national carbon pricing, and Australia has recently taken steps toward that goal.
The carbon cashback solution is our best first step
to reduce the main cause of climate change.
to reduce the main cause of climate change.
This solution is also known as carbon fee and dividend.
When businesses and consumers alike see that fossil fuels will become predicatably more expensive in the long-term because of the carbon fee, they will start to invest in energy efficiency and cleaner energy technologies in order to save money and compete.
Consumers will be protected from the temporarily rising energy prices by the dividend. Most families will receive more money in their cashback dividend than they will pay in higher prices each month. Low-income households will come out the furthest ahead. Anyone can do even better by adjusting their behavior, such as their transportation choices, or by investing in lower carbon technologies for their home. Over time, carbon cashback will lead to affordable and abundant clean energy for all.
Just how much cashback are we talking about? By year 10 of the Energy Innovation Act, a family of two adults and two children would receive an annual dividend of nearly $3,000.
You can see how your family might do in the first year of carbon cash-back with the Carbon Dividend Calculator.
The IMF, World Bank, IPCC, and most U.S. economists say carbon pricing is the most powerful tool to reduce climate pollution.
Over 3,500 U.S. economists agree that the cheapest and fairest way to reduce climate pollution is to:
1) Put a price on carbon emissions at the source,
2) Rebate the money collected to all households equally, and
3) Add the carbon price to imports and remove it from exports in trade with countries that allow free pollution. Such border adjustments protect U.S. jobs and businesses, and incentivize other countries to match our carbon price, driving emissions down globally.
Three economists from the University of Delaware are among the signers of the Economists' Statement on Carbon Dividends:
Laurence Seidman, Chaplin Tyler Professor of Economics
Jorge Soares, Associate Professor of Economics
Jeremy Tobacman, Associate Professor of Economics
