By Robert Reich
How do we stand up to Putin and avert a climate catastrophe at the same time?
Quitting our addiction to fossil fuels. Here’s how we get there.
Russia is the world’s second largest crude oil exporter and the primary source of global natural gas. Regardless of the short-term effects on our pocketbooks, over the longer term we need to transition to renewable energies if we have any hope of keeping the earth habitable, and freeing our economy from the influence of geopolitical foes.
This is where carbon dividends come in.
It works like this. We put a hard cap on the amount of carbon we allow into the economy. Permits up to this cap would be issued, and energy companies could buy them in quarterly auctions. At every mine, refinery, and port of entry, these companies would have to use a permit for every ton of carbon dioxide that would be released into the atmosphere once that fuel is burned.
When they run out of permits, they cannot extract or import any more carbon-polluting fuel.
To keep the climate from rising 1.5 degrees celsius above pre-industrial levels – the goal of the Paris Climate Accord – we need to slash emissions by roughly 90%. Accomplishing this by 2050 would demand reductions of 7.5% per year.
Currently we’re decreasing at a rate of 1.2% per year.
With a carbon cap, in order to ensure we meet our goals, we could simply decrease the amount of permits issued by 7.5% every year.
But how would we do that without Americans getting clobbered by higher prices at the gas pump? That’s where the carbon dividends come in. The revenue from selling the permits will be distributed back to the public as direct payments, no strings attached.
For the majority of middle class and poorer Americans, the dividend will more than cover any increase in fuel prices, and they’ll come out ahead. The people who produce the most carbon emissions are by and large wealthy, and can afford the hike in prices.
The earth’s capacity to absorb carbon is a natural resource, one we should share equally, instead of giving the wealthy and oil profiteers free reign.
Plus, everyone benefits from a cleaner planet.
One study found that a quarter million premature deaths would be prevented over the next 20 years in the United States with a carbon fee and dividend program.
I know what you’re thinking right about now. Sounds nice, Bob. But it’ll never happen. Don’t be so sure! The idea is notably popular across the political spectrum.
And there’s already precedent for parts of this program. Since 2009, the Regional Greenhouse Gas Initiative has capped and sold carbon permits to power companies in 11 Northeastern states. It is boosting their economies and has proven politically resilient.
And in Alaska, every resident receives between $1,000 and $2,000 annually from the Alaska Permanent Fund, which invests the state’s oil royalties. Over 80% of Alaskans say it improves their quality of life.
We treat gas prices as something out of our control, giving dangerous amounts of power to petro-states like Russia – with alarming consequences. By weaning ourselves from gas dependence, we’d gain relief from dirty air that kills millions globally; relief from the constant hemorrhage of government subsidies for fossil fuels and from wars for oil; and, above all, relief from the ongoing destruction of the earth’s climate.
None of this is impossible.
The best way to contain Russia, and build a sustainable future, is with a carbon dividend.