CCL’s policy of carbon fee and dividend1 is designed to operate at a national level. Fees are levied when fossil fuels are extracted or imported into a nation and the revenue is distributed as an equal income to all citizens of the same country. But there’s a need for climate action at other levels too. CCL should be just as relevant in the personal, workplace, local government and international arenas. We should be offering solutions in these areas that are as beautiful and effective as fee-and-dividend at the national level.
But, at first sight, fee-and-dividend doesn’t translate easily to other levels. Or does it? I think we can even apply it to running a local car park.
I’ve been thinking about the University where I work and what we are doing about the Climate Crisis. Sadly, the answer is “almost nothing” but that’s starting to change. In fact, I’ve been asked to give a talk there about CCL and that got me thinking. Could we introduce a fee-and-dividend scheme for car parking to encourage staff and students to use public transport? The idea is simple, a fee for car-parking is introduced but, instead of the University keeping the money, it redistributes the income as a flat-fee to staff and students. The beauty of this is that you can set a high parking fee, to ensure a strong incentive to walk/cycle/catch the bus, without actually penalizing people very much (because the dividend would offset the full cost).
There are a few details to work on. The scheme would probably need to be split into three separate parts, one for staff, one for students who live off campus and one for students who live on campus. This would recognize that the car-parking needs of these three groups are quite different. There are also tax-implications for staff who get a net-payment (students could just get a discount on their fees). But these are minor issues that I believe could be overcome.
The same idea might also work for councils but it’s a bit trickier in that context. Parking price-hikes in return for council-tax rebates would penalize those not living in town centres and it would also drive even more of us away from the high streets. Perhaps this could only work if done in conjunction with introduction of greatly improved public transport. Still, it’s worth thinking about.
At the international level, too, there is scope for fee-and-dividend approaches. The recent COP meeting in Madrid largely failed because of arguments over which countries should pay into a mitigation-fund and which should benefit from it. The answer could be that everyone should pay in and everyone should get payments out. For example, if we set a carbon price of $10 per tonne of CO2(eq), that would produce a dividend of about $65 per person. The UK, for example, would then pay in about $5 billion but get back a refund of $4.35 billion.
The beauty of this is that, as with my car-parking example, incentives are magnified by the imposition of a relatively high fee whilst keeping the true cost relatively small because of the refund. Perhaps the fee-and-dividend approach to carbon pricing can be used across a wider range of applications than we’ve generally considered. It’s certainly worth thinking about.
1. Sorry, I’m not calling it “Climate Income” here but only because my title wouldn’t work if I did.