The Citizens Climate Lobby, in the UK and around the World, believes that the best way to implement carbon pricing plus revenue recycling is “Climate Income”. It works like this:
- A steadily rising fee is collected from fossil fuels at source (as they enter the economy). This corrects what economists consider the worst market failure in history, in which the community itself is forced to cover the true costs (particularly pollution & climate change) of the product.
- Income from the fee is divided up and (minus the relatively small cost of administration) returned in equal shares to all citizens, as dividends. This enables individuals themselves to make choices that protect them and incentivize green commercial initiatives.
- A Border Carbon Adjustment imposes a similar fee on imports from countries lacking a carbon price, and refunds the fee to exports from the home country. This not only protects home industries and stops industry ‘leakage’, but incentivises carbon pricing in importing countries – the most effective method of creating global momentum.
Climate income is also called Carbon Fee and Dividend or Carbon Dividends and it is widely supported by economists.
Such policies are also popular with the public when fully explained. For example, 85% of those involved in Scotland’s Climate Assembly were in favour of “a fair, equitable and transparent tax system that drives carbon emission reductions, while recognising different abilities to pay”.
Climate Income policies have been both discussed and implemented around the world over the last few decades. Further details about Climate Income can also be found on our FAQs page.
Climate Income is CCL-UK’s preferred method for implementing carbon pricing and revenue recycling but we also endorse alternative approaches advocated by other organizations that agree with our general aim of a people-friendly tax on emissions.
