How Climate Income works

A Climate Income (carbon fee and dividend) is a quick way to cut greenhouse gas emissions (40 percent within ten years), it’s cheap, and it protects the pockets of UK residents on low and middle incomes.

Who pays the fee
The fee is a charge for greenhouse gas pollution.
But it is different to VAT and petrol duty – the public is not charged.
The businesses who extract or import fossil fuels would be charged through a new law, according to the amount they burn.
The fee is set per tonne of greenhouse gases released from burning fossil fuels.

Climate Income protects people on low and middle income
The dividend payment is vital to protect the pockets of UK people on low and middle incomes while humankind moves away from burning fossil fuels.
The fee on fossil fuels must be high enough to make this work.
But people must be able to afford heating and transport while we wait for clean energy to become the norm. And it must be popular with the voting public to survive successive governments.

How Climate Income is distributed
All resident adults in the UK receive a payment, children half. The payments are equal, regardless of household income or carbon footprint.
It could be through an income tax rebate, as a benefit payment or through an app.
But it must a separate payout, labelled ‘climate income’ or ‘climate dividend’ to help with its popularity so the public is reminded that this extra money is to fight climate change and to help them budget for short-term rising costs.

Fossil fuel-burning businesses will be charged through a government law
It will most probably be a new law or an amendment to the existing one – such as the 2008 Climate Change Act – or introduced into a government budget.
This is why Citizens’ Climate Lobby works to influence our MPs and MEPs as our elected representatives in government and the EU.

Clever businesses will switch to cheaper, clean energy
Although the public won’t be charged directly (like petrol duty or VAT), we expect business to behave as usual – ie they will raise their prices to cover their higher costs.
So burning fossil fuels will become more expensive, but we don’t expect this to change behaviour by itself – clever businesses will stop using fossil fuels in their production because clean energy will be the cheaper option. And innovative technology will be encouraged because, again, it will be cheaper.
So better and more affordable clean energy options will be created and people will want to switch to the cheaper option.

Why just doing our bit isn’t enough
We don’t have a choices to each do our bit! Usually the worst environmental option is the cheapest. Leaving it to personal choice and voluntary business agreements has not stopped the terrifying rise in global emission levels.
By creating change at a national level – through the UK government and cross-party cooperation – a climate income will help create a world where there are only good choices.
And the success and example of the UK can help lead the rest of the world in fixing climate change.

A climate income will stop the UK exporting emissions
This is why fossil fuels are charged at source. Unless there is an equivalent carbon fee at the country of origin, fossil fuels – and fossil fuel intensive goods – will be charged.
There’s no place for emissions to hide.
It will not be cheaper to make a product outside of the UK and re-import.
This also encourages other countries to have a carbon fee – they would want to keep the revenue from their own fee (or give it back as a dividend to their own people) rather than give this money to the UK.

A climate income would protect UK export business
The UK has to protect its economy or we will swap climate change problems for instability.
So when businesses export their goods, the fee will be refunded.

Here is an explanation of a carbon fee and dividend from The Guardian.