Many thanks to all the members who responded to our request for comments and articles about the benefits of CF+D in relation to the IPCC report. It’s great to see a variety of points of view (remember they are members views and not official CCL policy).
Here are the first 3……
In light of the IPCC AR6, urgent action is needed to reduce our nation’s GHG emissions and transition to a carbon neutral economy.
Why is the Carbon Fee & Dividend the right approach to this goal?
Primarily, it targets the largest contributors to the climate crisis, the fossil fuel corporations. The carbon fee will increase the cost of fossil fuel and make future investment into burning fossil fuels less profitable and as such we will incentivize a faster transition to cleaner renewable energy.
The fee companies will pay a fee which is proportional to the amount of fossil fuels they burn, as a result of this fee the prices of carbon will rise and customers will be encouraged to swap to greener companies.
CF&D redistributes wealth to all UK citizens, which is especially useful after the economic downturn onset by the pandemic, protecting the people that are most vulnerable during this transitional period.
Our government can act quickly to address the climate crisis, with COP29 coming at the end of October, now is the perfect time to tackle the monumental challenge of decarbonising our economy.
Climate Change – A market failure
November is rapidly approaching, and with it the UN COP26 climate meeting in Glasgow. The incredible sequence of natural disasters this year, including wildfires in the US and flooding in Germany, has only emphasised the need for international agreements to reduce fossil fuel use and prevent catastrophic climate change. And yet, little progress is being made.
Economists have long agreed that climate change is a market failure: the normally efficient markets have not captured the true social cost of climate change in the price of fossil fuels. Markets instead price fuels at extraction cost, because markets left to themselves focus on costs incurred by buyers and sellers now, not at some future date when the climate has been damaged further.
It’s up to governments to create rules which ensure that markets account for future social costs of the carbon dioxide pollution which causes climate change. A carbon tax is the obvious government intervention which would make market economies such as the UK systemically recognise the social costs of burning coal, oil and gas. However, politicians around the world, naturally worried about passing further unpopular taxes, have largely resisted taxing carbon, especially after the French yellow-vest protests against Macron’s fuel tax.
Carbon taxes can in fact be made more politically palatable through the “carbon fee and dividend” policy, which would tax all fuels at point of extraction or import, and return the carbon tax revenue to taxpayers as a flat dividend per person. Returning the tax revenue to the public would mean that there would be no net tax burden and no unemployment caused. The flat dividend per taxpayer would also compensate lower income people who might otherwise be forced into “fuel poverty” by higher fuel prices. The higher cost of fossil fuels across the board would encourage their replacement with other energy sources. These benefits are the reason that Citizens Climate Lobby tries to encourage carbon fee and dividend.
The UK already has a carbon tax, but has not raised it to the point where fossil fuels are more expensive than renewable or nuclear power, which is the only way that markets will completely replace fossil fuels. The only way such increases in carbon taxes are likely to be acceptable to the public is through a policy of carbon fee and dividend. The UK should immediately take steps to raise its carbon tax through a carbon fee and dividend, and encourage other countries to follow its lead. Otherwise we are like to see in Glasgow yet another failed climate meeting.
Carbon fee and dividend and the levelling up agenda.
In his book Poverty Safari, Darren McGarvey describes in often harrowing detail the experience of life on the Pollok housing estate near Glasgow. McGarvey blends powerful accounts of his emotional experiences with expressions of frustration at attempts by politicians and bureaucrats to address his community’s social deprivation. Some of the experiences McGarvey describes are recognisable from a short period when I lived on the Hulme estate in Manchester in the mid-1990s. I believe that McGarvey’s book is essential reading for those who want to advocate for policies such as Carbon Fee and Dividend. Let me try to explain why.
The basic message of Poverty Safari is that the two poles of mainstream politics, right and left, have failed communities like Pollok, leaving people alienated and disillusioned. Yet both poles also capture what is best in such communities. On the one hand, the political right emphasises a culture of personal and financial responsibility and respect for people’s property. McGarvey’s father instilled such values in his son, but it is difficult to live up to them when one is struggling financially and when basic services such as schools and libraries barely function, and are often being actively run into the ground. On the other hand, the left emphasises concerns about social justice and solidarity that have a long history in places like Pollok. However, mainstream left wing policies are often overly bureaucratic: the money invested often goes to paying well-meaning middle-class employees of what McGarvey calls the ‘poverty industry’.
What does all this have to do with Carbon Fee and Dividend? I believe that, if well-designed and implemented, Carbon Fee and Dividend is a policy that would empower people in communities like Pollok, while addressing the disillusionment and frustration that McGarvey describes. In short, Carbon Fee and Dividend offers direct payments to individuals (the ‘dividend’). These payments are funded by ‘fees’ that are charged directly at the sources of greenhouse gases, such as industries that extract fossil fuels. On the one hand, this policy resonates with the culture of individual responsibility that McGarvey’s father valued: individuals are directly empowered to choose how they use their dividend. On the other hand, it also resonates with the culture of social justice: individuals are not left feeling that the costs of climate policies are being unfairly pushed onto them – and the direct nature of the payments mitigates the need for a bureaucratic ‘poverty industry’ to administer the policy.
One might assume that issues such as climate change are distant concerns for people faced with the immediate consequences of social deprivation. Yet McGarvey’s description of a 30-year protest against the M77 motorway shows that the environment is an important issue for his community, and that environmental action can be a source of positive activity and a boost to self-esteem. Imagine what could be done if people had the resources and time to make their own choices about environmental issues.
Of course, a policy like Carbon Fee and Dividend cannot, on its own, address all the issues that communities like Pollok face – and neither is it a single magic bullet solution for climate change. However, the policy is vital as a way to show that climate change policies can be fair and efficient – that they are not just a luxury that only the middle classes can afford. Carbon fee and dividend is a way for politicians who advocate a levelling up agenda to put their money where their mouth is.
We need to get people in communities like Pollok on board with Carbon Fee and Dividend – and we should embrace the challenges this brings. McGarvey describes an incident in which a visiting politician was so frightened of the people he was talking to that he had to constantly doodle in a notebook to stop his hands from shaking. People in Pollok are not naïve: successfully explaining Carbon Fee and Dividend to them would be one of the best tests of its credibility we could hope for.