Our country needs a broad and swiftly rising Greenhouse Gas Fee covering all emissions from energy sources that will finally put a price on the climate-altering greenhouse gas pollution that threatens our future. Such a fee represents a climate solution that is economically efficient and cannot be politically gamed. It will level the playing field for low-emissions technologies, provide consumers and businesses with visible and predictable price signals, help sufficiently reduce our near- and long-term emissions, and position the United States to lead the clean energy revolution.
Unlike current policy proposals, a Greenhouse Gas Fee has the potential to provide large sources of revenue to:
Protect the most vulnerable consumers from price increases
Provide funding for renewable energy technology Research and Development
Protect vulnerable communities from already unavoidable climate changes through a Climate Adaptation Fund
Provide jobs Training and Transition programs for blue-collar workers in vulnerable industries
Support municipal and regional governments in funding alternative transportation networks
Fund nationwide upgrades to the electricity grid, creating a so-called “smart-grid” to support renewable energy generation and reduce transmission waste
The fee should be flexible to ensure efficiency, and mechanisms should be established to adjust the fee and/or rate of growth when necessary, based on market and consumer responsiveness, unexpected technology disruptions, and changes in understandings of climate science and projected impacts.
We propose for consideration three different fee structures beginning in 2015:
$15 per metric ton fee that rises at $15 annually
$15 per metric ton fee that rises at 15% annually
“Hybrid” fee that starts with a flat-rate increase of $15 per metric ton annually and begins to increase by 15% annually in 2025
The fee rising at a flat rate would have the benefit of reducing emissions greater in the short-term, but the fee that increases exponentially leads to lower emissions levels in the long run. Since it is important to reduce our emissions substantially now and to ensure that we continue to reduce our emissions in the long term, we advocate for the “hybrid” fee, which would reduce CO2 emissions from 2005 levels by at least:
31% in 2020
96% in 2050
Additionally, applying the same "hybrid" fee to fugitive methane from coal, oil, and gas systems would incentivize the capture of overall methane emissions by at least:
19% in 2020
35% in 2050.
It is important to emphasize that we do not expect the higher fee values modeled for the later years (for the exponentially increasing and hybrid models) to be necessary. Rather, these are estimates of what would be necessary if there were no major technological changes (which the fee would certainly inspire) or any changes in currently estimated levels of consumer or market responsiveness to price changes (which the strong and swiftly rising fee would certainly induce).
The design of the fee allows for necessary changes in the level of the fee or the rate at which it rises in response to unexpected advances in technology, faster than expected or slower than needed market responses to reduce emissions, or changes in responsiveness to higher emissions fees. In the unlikely scenario that such changes do not occur, the levels presented are what would be needed to ensure the safe levels of emissions reductions; the goal of the fee is to reduce emissions to safe levels by making polluters and consumers pay for the prices of their emissions, not to punish hard-working Americans.
Our proposal has the potential to ensure the necessary short and long-term reductions in emissions, protect vulnerable consumers and workers, and gradually urge forward the economy on a steady transition towards a clean energy future.