In 2014, the Citizens’ Climate Lobby US commissioned a report from the Regional Economic Models, Inc (REMI) to assess the potential impact of carbon fee and dividend. Although it is an American study, it gives us an idea of what might happen in the UK.
Highlights from the study.
The REMI Study examined the effect of a progressive fee and dividend (F&D) carbon tax, starting at $10 per ton of CO2 on the national economy as well as the economies of nine regions of the US. The study then compared these results to the baseline case where there is no price on carbon.
- CO2 emissions decline 33% after only 10 years, and 52% after 20 years relative to the baseline, $0/ton of CO2 case.
- National employment increases by 2.1 million jobs after 10 years, and 2.8 million after 20 years. This is more than a 1% increase in total US employment we don’t get without a carbon fee!
- 13,000 lives are saved annually after 10 years, with a cumulative 227,000 American lives saved over 20 years.
- $70-$85 billion increase in Gross Domestic Product (GDP) from 2020 on, with a cumulative increase in national GDP due to F&D of $1.375 trillion.
- Maximum cost-of-living increase by 2035 is 1.7-2.5%, depending on region. That’s 1 year’s normal inflation spread over 20 years!
The take-home from this study is that Carbon Fee & Dividend grows the economy in terms of jobs and GDP, while at the same time also reducing the country’s emissions and improving citizens’ health.