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MIT alumni can engage their colleagues and Congress to enact effective carbon pricing in the form of a Carbon Fee and Dividend.


Description

Summary

MIT’s climate action plan acknowledges that "appropriate pricing of carbon is widely accepted as an essential policy instrument to help mitigate climate disruption." MIT has also chosen not to divest from fossil fuel companies because it would be inconsistent with its “strategy of engagement that forms the heart of today's plan".  

We propose a strategy of engagement by MIT Alumni to help enact an efficient, effective, and equitable plan to price carbon emissions. Citizens' Climate Lobby believes this to be an escalating carbon fee, levied far upstream at the source of these fuels, with full return of the revenue to citizens as a monthly dividend, accompanied by border carbon duties to harmonize other economies (CFD).

MIT faculty and alumni are already involved in efforts to address climate change -- in research, developing and marketing low carbon technologies, working in climate science, economics and policy, while others work with those impacted by climate change. Some are already members of Citizens’ Climate Lobby (CCL) and engaged in lobbying efforts. MIT alumni are highly educated, influential and well-connected.  We can add our voices to the rising chorus calling for smart carbon pricing.

Rallying the alumni community toward enacting an effective CFD enhances all other efforts by targeting the core problem: runaway carbon emissions. Our proposed policy will effectively reduce greenhouse gas emissions, stimulate investment in low carbon processes and grow the economy, while protecting the most vulnerable.  A successful U.S. CFD can help lay the groundwork for global carbon pricing.

We urge MIT alumni to investigate CCL's elegant plan, then engage with the diverse voices advocating this powerful legislation. CCL provides the resources needed to empower individuals in this effort. 

For more background, please see  CCL's winning proposal, The Little Engine that Could: Revenue Neutral Carbon Fee and Dividend, in the 2015 CoLab US Carbon Price contest. 

 


What actions do you propose?

First: Understand the proposal

A predictably rising carbon fee, levied at the source (wellhead, coal mine, port) begins to internalize the externalized, or hidden costs, of fossil fuels, correcting a serious market distortion. By incorporating their externalities like health effects and environmental damage into their  price, their true social costs become evident, sending a market signal to shift investment to lower carbon technologies. The dividend return to households provides a financial cushion for consumers, allowing them to absorb the increased cost of energy and goods as it returns funds to the base of the main street economy. Full dividend return avoids political squabbles over the disposition of trillions of dollars over time and addresses objections about enlarging government revenues. Aggregate consumer demand for lower cost, lower carbon products will incentivize industry to produce them, thus using healthy market competition to drive change. 

Everyone gets the same dividend. Most households will receive more in the dividend than they pay out in increased goods and fuel costs.  Affluent consumers will typically receive less in the dividend than they pay in increased costs simply because their high consumption rates leave large carbon footprints.

It's important that US industry not be disadvantaged relative to countries without a carbon price. CFD includes a border adjustment to act as the world carbon pricing entity, taxing imports of basic goods and materials from countries that don't price carbon and rebating the proceeds to US producers to level the playing field. The border duty will motivate other countries to enact their own carbon pricing policies in order to avoid paying American taxpayers for the privilege of doing business in the world's largest economy.

According to the World Bank, carbon pricing is not a new concept. China leads a list of 73 countries, 22 states, provinces and cities, and over 1,000 businesses and investors who signaled their support for carbon pricing ahead of the recent U.N. Climate Summit. Together, these governments represent 54 percent of global greenhouse gas emissions and 52 percent of global GDP.

Industry expects carbon pricing. Shell, Exxon, members of the Carbon Disclosure Project, and others factor a shadow carbon price into their internal processes.

But not all carbon pricing schemes are created equal. Cap and trade in Europe has resulted in emission allocations far in excess of current emissions and a price so low as to be meaningless. The offsets in California's cap and trade system are being blamed for increased clear-cutting of forests.  

A rising carbon fee and dividend with border duties will send consistent market signals for the intensive investment urgently needed to shift the world’s economy away from its deadly reliance on artificially "cheap" carbon based fuels.  Spurred by a predictably rising price, investment and demand will accelerate innovation and deployment of low carbon technologies. Direct dividend return protects households from the rising costs of goods and energy; it puts money in their pockets, creates jobs, and -- importantly -- political stability. This perceived stability might result in lower borrowing costs as industry funds investment. Volatility is dampened, a boon to planners. 

A broad range of leaders believe that a carbon fee and dividend can be effective. A short list includes The New York Times, NASA's Goddard Institute for Space Studies former director Dr. James Hansen, former Secretary of the Treasury and State George P. Shultz, Harvard economist Greg Mankiw, Bill Nye the Science Guy,  the US Presbyterian Church,  the Philadelphia City Council, Exxon's CEO,  2/3 of Americans and many others.  

Second: What MIT Alumni can do

  1. If you are already working on climate change mitigation or adaptation, thank you.
  2. Watch this 2-minute video by a CoLab member Climate Fixed in Two Minutes for Free (Carbon Fee and Dividend).
  3. Visit the CCL website at www.citizensclimatelobby.org.
  4. Contact CCL through the CCL website or send an email to the authors of this proposal via their CoLab IDs to discuss your questions and how CFD could facilitate your project.
  5. Join CCL.  There is no fee or obligation but you get access to a wealth of resources. CCL members would be happy to help start a sub-chapter at MIT, an MIT focused discussion group within our Boston Chapter, and/or a national discussion group specifically for MIT alumni.
  6. Engage with those already speaking out for a carbon fee and dividend (see "Who Will Support These Actions" section below)
  7. Network.  Business leaders can be particularly influential in the legislative process by publicly advocating carbon fee and dividend as a critical measure to sustain American competitiveness in the global market. The steady price signal supports long term business planning. It will spur investment in the clean energy technologies that MIT people are developing. Many might be surprised to know that almost all of the major fossil fuel companies are already advocating for a price on carbon.  Exxon CEO Rex Tillerson supports a revenue neutral carbon fee and dividend.  This might be an opportunity for Fossil Free MIT to engage with oil companies. 
  8. Lobby your elected officials for a CFD. There are a variety of actions you can take. The right "fit" with an organization or person from "Who Will Support These Actions" can produce effective and gratifying results, whether it be writing a letter to the editor or your Member of Congress, lobbying in person or even testifying before Congress.  There are resources on the CCL website addressing all of these activities.
  9. Communicate.  Advocates for CFD can get the word out via Technology Review, Alumni Notes, reunions, local alumni meetings, social media and personal connections. CCL will arm you with facts and concise talking points. 

 

Third: Find your niche. 

CCL and the following organizations can provide the education and resources to help alumni learn about a CFD and work effectively with elected officials to introduce and enact the necessary legislation.

CCL is unique in its laser focus on CFDCCL has, in the past 5 years held over 3,000 meetings with elected representatives, published well over 6,000 pieces in print media, and delivered over 10,000 personal letters to Congress on behalf of CFD.  It now (January 2016) has 25,000 supporters, in all Congressional districts, organized into almost 300 chapters engaged in building respectful relationships with media, Congress and their staffs.  

The June, 2015 international CCL annual meeting drew over 900 volunteers to Washington, DC, who met with over 500 Congressional offices. CCL is unique in its accumulated information about specific Congressional views on carbon pricing and has explored how the dividend would actually work based on the Bush Economic Stimulus Plan disbursements by the U.S. Treasury Department. 

Others engaged in lobbying for a CFD: 

Individuals - the following leaders have called on Congress to enact a CFD

 

Groups - the following municipalities and organizations have passed resolutions formally endorsing CFD.  

 

Active lobbying for a carbon price - not specifically a CFD but asking for action on climate change and/or a carbon tax

Political Leadership:

 

Think tanks and policy centers: 

 

Corporate efforts: 

  • Shell,  members of the Carbon Disclosure Project, and others. already use a shadow carbon price into their decision-making processes.
  • European Union oil majors (BP, BG Group, Eni, Royal Dutch Shell, Stat Oil, Total) have called for a predictable carbon price and a “clear roadmap for future investment, a level playing field for all energy sources across geographies.” 
  • Ceres is building corporate responsibility efforts and can promote a CFD.   More than 1600 companies have signed the CERES Climate Declaration

 

Civil Society: 

 

 

We can lay the groundwork for a global carbon price

There is universal agreement on the critical need for effective global carbon pricing, the sine qua non of the urgent transition to low carbon energy and processes. A powerful catalyst is required, but despite the historic goals set at the climate summit in Paris, that catalyst is not the United Nations. For better or worse, the U.N. is not the world's government. Therefore, that enforcement mechanism must be the world's economy, via the carbon fee and dividend with border duties.

A hodgepodge of individual national commitments is insufficient to reign in runaway fossil fuel consumption.  A US CFD can serve as a template for carbon pricing throughout the world.  MIT alumni, working together to lobby for a CFD, can be a model for other schools' alumni to help make global carbon pricing a reality.  In a democracy, citizens have a responsibility to get involved.

Time is of the essence. MIT alumni can help make The Little Engine That Could become The Little Engine That Did. 

Related proposals

The Little Engine That Could: Revenue Neutral Carbon Fee and Dividend  - CCL's winning entries in the 2015 and 2014 US Carbon Price contest. Urges US climate leadership via carbon fee and dividend return to households.

Put a Price on Carbon - MITACAL entry in Harnessing the Power of MIT Alumni Contest also suggests MIT Alumni meet with their legislators to advocate for revenue neutral carbon pricing within their jurisdictions. Mentions on-going carbon pricing efforts in Washington state, Oregon, Vermont and Massachusetts

References

  1. Bob Inglis: Changing the Dialogue on Energy and Climate, TED talk by a conservative Republican member of Congress.  
  2. Center for Climate and Energy Solutions, Options and Considerations for a Federal Carbon Tax
  3. Paul Krugman, Building a Green Economy
  4. Michael Wara, John Weyant, The Case for a Carbon Tax as US Climate Policy, Stanford University webcast, January 6, 2014. 
  5. Carbon Tax Center, Design of Economic Instruments for Reducing U.S. Carbon Emissions, addressed to the U.S. Senate Finance Committee, January 2014, submitted on behalf of Citizens' Climate Lobby
  6. Risky Business, The Economic Risks of Climate Change in the United States
  7. Skeptical Science, The Economic Impacts of Carbon Pricing
  8. Congressional Budget Office, May, 2013, Effects of a Carbon Tax on the Economy and The Environment
  9. Hassett, Mathur and Morris, A Carbon Pollution Tax in the Context of Broader Tax Reform: Design and Distributional Issues, American Enterprise Institute, November, 2012.
  10. Dinan, Terry, Offsetting a Carbon Tax’s Costs in Low Income Households, CBO, Working Paper 2012-16, November, 2012.
  11. Joshua Meltzer, A carbon Tax as Driver of Green Technology Innovation, Brookings, May, 2012.
  12. James Hansen, Too Little, Too Late? 
  13. PwC: Too Late for 2 Degrees? 
  14. A Call for Carbon Pricing at COP21, Carbon Tax Center
  15. CCL's CFD Endorsers Project Database