Citizens’ Climate Lobby UK statement regarding the Environmental Justice Commission Report July 2021

Citizens’ Climate Lobby welcomes the call for a People’s Dividend, as described in the citizens’ juries report by the cross-party Environmental Justice Commission and reported in The Guardian newspaper.

Fairness and the emphasis on nature, green spaces and clean energy are essential ingredients in mitigating climate change and protecting our liveable planet – and are rightly the focus of the report.

The proposed People’s Dividend recognises that carbon pricing is an important tool in reducing greenhouse gases, especially one which is charged when fossil fuels are extracted or imported rather than to the consumer when they fill their cars or turn on their heating. But it also recognises that a necessary high price would inevitably be passed down to the consumer – a mitigating payment would avoid potential financial hardship and political backlash by protecting households with vulnerable finances.

The example of Canada’s redistribution of a carbon revenue – the second time this week Canada’s carbon fee and dividend has been used as an example in a national policy proposal – shows that a transparent carbon price can be both effective, fair and trustworthy.

But there are important differences between the People’s Dividend and the simple Canadian-style carbon fee and dividend, backed by Citizens’ Climate Lobby International, and called Climate Income by Citizens’ Climate Lobby UK.

Important differences between a People’s Dividend and Climate Income

  • Climate Income is not generated by taxation. It is a fee charged to companies with the money collected returned equally to UK people, regardless of individual income or carbon footprint. Because the government would not keep any of it, but act as the administrator, it is a business fee.
  • This is an important difference because the process is completely transparent, inspiring confidence that the fee will be distributed as promised and not used for non-environmental spending as happens with, for example, fuel duty.
  • Climate Income bypasses arguments and avoids criticism over the best way to spend the money.
  • Climate Income corrects a deficiency in the market which favours fossil fuels – because the current carbon pricing does not fully take into account the polluting cost of fossil fuels – and then allows market forces to decide the most efficient and cost-effective method of providing clean energy, products and services. This avoids public investment and legislation into environmental ‘red herrings’ – apparently cleaner technology which turn out to be the same or worse than existing fossil fuel-based technology, such as with diesel cars.
  • At no cost to the public purse, Climate Income encourages confident investment in clean energy and clean energy technology. This will enable people to do the right thing because there will be more affordable low-emission, climate-friendly choices.
  • Climate Income rewards people with lower carbon-emitting lifestyles as they will keep more in dividends than they pay out in higher prices on fossil fuel-heavy products and services. When a high percentage of the carbon fee is recycled, rather than a selective grant, many more people will be better off and protected from rising prices. It is estimated that if 99 percent of the fee were given back to the people (with one percent retained for administrative costs), at least two thirds of the population would be better off. See this modelling by Professor David Waltham.
  • It tackles child poverty by paying half the adult dividend to each UK child.
  • It keeps administrative costs low by making equal payments to everyone without the costs of means testing, income thresholds or application processes required by grants.
  • A great deal of greenhouse gases would be reduced with no public spending with this policy alone – it is estimated by US modelling that greenhouse gases would be cut by 33 percent in ten years. This is supported by the results of the Canadian province of British Columbia, which has CF&D for more than ten years, and the Swiss version which focussed on home heating emissions.
  • A border carbon adjustment would ensure the UK’s emissions are not exported in overseas manufacture.

The Canadian-style policy – which recycles 90 percent of the carbon fee – is backed by hundreds of economists around the world such as Mark Carney, as well as environmental scientists such as Katherine Hayhoe and James Hansen, and activists such as Jonathon Porritt.