Editor,

On Sunday, the youth group of San Mateo County’s chapter of Citizens’ Climate Lobby held a rally in San Mateo’s Central Park, calling for federal climate legislation, specifically HR 2307: The Energy Innovation and Carbon Dividend Act. HR 2307 would place a steadily rising fee on greenhouse gas emissions, paid by fossil fuel companies, with 100% of the revenue distributed equally to all lawful U.S. residents, half-shares paid to children.

This kind of plan — putting a price on carbon pollution — has been endorsed by four former chairs of the Federal Reserve, 28 Nobel Laureates, 15 former chairs of the Council of Economic Advisors, and subsequently by thousands of professional economists in a letter to The Wall Street Journal. They wrote that a bill of this kind is “the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary,” and that “the majority of American families, including the most vulnerable, will benefit financially by receiving more in ‘carbon dividends’ than they pay in increased energy prices.”

The student rally featured speeches of support from state Sen. Josh Becker and Assemblymember Kevin Mullin, San Mateo Deputy Mayor Rick Bonilla, Councilmember Amourence Lee, and San Carlos Mayor Laura Parmer-Lohan.

Numerous other elected officials and city commissioners attended. Citizens’ Climate Lobby is encouraged by the increasing support for a federal price on carbon emissions. We are especially grateful that U.S. representatives Jackie Speier and Anna Eshoo both cosponsor HR 2307.

Alan Mattlage

San Mateo

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(14) comments

Terence Y

Mr. Mattlage – thank you for a summary of the rally. However, everyone knows that any fees on greenhouse gas emissions will not be paid for by fossil fuel companies. These companies will, as they always do, pass on those fees to consumers. As for 100% of the revenue distributed equally to all US residents, that pipe dream would never occur, once the government takes out their pound, or 10, of flesh in the form of governmental fees and taxes. Not only that, the non-US residents will cry foul since, well, this is 2021 (need I say more?) As for your list of people who think the majority of American families will benefit financially by receiving more in “carbon dividends” than they pay (assuming what you're reporting is true), do these same folks believe in the redistribution of income? They must because that’s what they’re proposing, so as soon as they impart some of their wealth to someone more vulnerable, such as myself (it’s all relative), then maybe I’ll take stock in their endorsement.

Ray Fowler

Hello, Terence

With respect to CO2 emissions, a week ago, another reader said in the comments section, "... we can, and should, control what we do in order not to aggravate the problem." I agree and added, "I feel replacing our reliance on fossil fuels with the development of practical alternatives is a positive step in that direction."

But it doesn't end there...

Then I asked, "Last year, the United States was responsible for 15% of the world's CO2 emissions... we can bring that number down. However, what can be done about China and India's combined 40% of the world's CO2 emissions? Will we just have to wait until others on our planet recognize the harm they are doing to the environment?"

The reply to those questions said the US should set the example for the world and show some leadership. I agree with that response, too.

So, my question now is... who will provide that leadership?

Dirk van Ulden

Ray - you forgot to mention the outstanding organization that solves all of our problems: the United Nations! That group of useless bureaucrats keeps on cranking out reports while spending our hard earned money and has not done a thing to come up with practical solutions. The remaining 45% of the CO2 emissions come from countries that signed onto the toothless Paris Climate Accord and have, in particular Northern Europe, paid lip service to the goals that they set. As the other person mentioned that we should do what we can, and I agree, but we should not beat ourselves up and support the Carbon Act that is economically unsustainable. Most of those in leadership positions who support this bill could not fight themselves out of a wet paper sack. Not a single real economist would support this pipedream.

Ray Fowler

Wise words... thanks.

The Donald told NATO that member nations should pay their fair share. Perhaps UN members should be held to the same standard.

AlanM

Ray, you raise an important point about emissions from other countries. HR2307 also includes what is called a "border adjustment," meaning that countries that don't have a carbon fee similar to the one the HR2307 would impose would be required to pay a tariff if they sell fossil fuels or fossil fuel intensive products to the US market. This would give them reason to implement a domestic tax on their carbon emission to keep their money from getting paid to the US due to the tariff. A border adjustment is under consideration in the budget reconciliation bill Congress is currently writing. It would not only make us leaders, it would give other nations a financial incentive to follow us.

Ray Fowler

Hi, Alan

Thanks for providing more info on this topic. I'm not a climatologist or an economist, but how would border adjustment be applied to the CCP? If China corners the market on certain products, can we still insist on a tariff for items not manufactured in the US? In such a scenario, would it be possible for Chinese corporations to raise prices to offset payment of a tariff and keep polluting?

Terence Y

Hi Ray, nice to see you roaming around these pages, I've missed your dialogue. As for your leadership question, I’d like to hear from a few folks who believe in man-made global warming to answer. In my opinion, the US is currently in no position to set any kind of positive example, as Biden’s actions at the G7 and Afghanistan have been a global embarrassment. Regarding China and India, I see them taking the approach that they’re allowed to become full-fledged industrial nations, using as many forms of energy to attain that goal, just as America did and I’d agree. Maybe if America started embracing nuclear energy, then other countries would also embrace nuclear energy. After all, Chernobyl couldn’t happen here, with all our brainpower and technology, could it?

Ray Fowler

The New Green Dealers go silent when the topic of nuclear energy enters the conversation.

As a retired naval officer, I am biased. The Navy launched its first nuclear powered submarine over 65 years ago. Currently, the Navy is operating more than 150 nuclear reactors... no Chernobyls... no Three Mile Islands. Nuclear power is a viable alternative power source.

AlanM

Mr. Y -- Based on how companies have handled tax increases in the past, about 75% is passed on to the consumer in higher prices. About 25% is covered by the company through reductions to operating costs and stockholder dividends. How the revenue from the carbon fee is to be distributed is clearly described in the legislation. If it is not distributed in the manner required by law, the federal government certainly would be sued and would have no leg to stand on.

Terence Y

Mr. Mattlage, thank you for your response. However, I find it hard to believe that energy companies would only pass on 75% of the increase, eating the other 25%. Regardless, costs, whether 75% or 100%, are still being passed on to consumers, raising consumers’ costs of living. In other states, probably not as big a deal, but have you checked CA fuel prices vs. other states? As for revenue being distributed as per legislation, it may come down to accounting, and whether Hollywood or CA accounting is used or GAAP. After all, supposedly CA has a surplus (we’ll need everyone to ignore the over $350 billion in long-term obligations and the almost $270 billion in unfunded liabilities). But heck, as long as I get my share of the $12 billion in CA stimulus… Actually, even if I get my share (doubtful) I’m still voting YES on the recall.

AlanM

Economists look pretty carefully at empirical data regarding how much of a tax is "passed-through" to consumers. It varies according to a lot of factors, including price an supply elasticities. The libertarian Cato Institute has published research that shows only 17% of corporate taxes are passed on to consumers. I suspect that low number is a result of the general state of competition in the economy and the demand elasticity of most products. The demand for energy is less elastic than most products, so one can expect more of the tax to be passed on to consumers. A Yale University study found that 70% of energy cost inputs (which would include a carbon tax) are passed on to consumers. In any case, even if 100% of the tax is passed on to consumers, economic models indicate that roughly 2/3 of households would receive more from the dividend than they experience in higher prices. The only people who will lose out much are the top quintile of income earners. They will see a 0.25% decline in their finances. Here is a link to an economic analysis done specifically for the carbon fee and dividend proposals promoted by Citizens' Climate Lobby. https://citizensclimatelobby.org/wp-content/uploads/2018/06/HIS2-Working-Paper-v1.1.pdf

Terence Y

Mr. Mattlage, thank you for the link to the working paper – an interested read, although results indicate what others have already surmised – the carbon fee is an income distribution. What is surprising (if I’m interpreting the data correctly) is that the income being redistributed is coming from a variety of cohorts: the 4th and 5th consumption quintiles; older adult households; people ages 50 and above; white folks and to a lesser degree, Asians. Also, as surmised, lower income households will benefit, although their tax burden is still increased due to additional costs. Medium and higher income folks will also see increased costs along with their existing tax burdens. Bottom line – increased costs for everyone and income redistribution from a variety of sources, not all of who can afford it. And we’re still not addressing China and India’s contributions, along with other growing economies, such as Africa, who will build fossil fuel burning plants to meet their energy needs. How about getting everyone to go nuclear? Your thoughts on nuclear power, Mr. Mattlage? Viable, non-viable?

AlanM

Mr. Y, thank you for looking at the working paper. As you can see the economics is more complicated than can be reflected in a letter to the editor, but certain top-line results are clear. You're correct that a carbon fee and dividend program will distribute economic advantages differently than before it is applied, but that is true of any tax. So it goes without saying. What is important is to ask what is the purpose of the tax and who is burdened and who is benefitted? In this case the tax is imposed to create market pressures to eliminate greenhouse gases and improve air quality. The people who are burdened are those who are responsible for more than an average amount of pollution. The people who are benefitted are those who are responsible for less than an average amount of pollution. That is, polluters pay for what they are doing to our air. 15% of households pollute more than what is roughly the average. Who are these people? 60% are in the top quintile of income, 22% are in the second highest quintile, 10% are in the middle quintile, 5% are in the second to lowest quintile and 1% are in the lowest quintile. How burdened are they? Of people in the top quintile who are burdened, they typically lose 0.21% of their income. (Image a penny tax on every 5 dollars you spend and the consequence is a cleaner safer future.)

AlanM

Regarding nuclear energy: It has obvious problems, but it currently provides a sizeable share of our GHG-free electricity. Decommissioning plants at this point would make reaching a zero-carbon economy more difficult. Whether new construction is needed will depend on a lot of factors, particularly the speed we can build out wind and solar, the development of storage capacity, and our ability to provide 24/7 clean energy. I'm not conversant in detail with all the factors, but my understanding is that we can reach something like 80% clean energy without nuclear power using only current technologies. What wind, solar, and battery technology will be able to do when we're working to eliminate that last 20% is an open question. Personally, I'm not in favor of decommissioning nuclear plants if that can be avoided, but ultimately it would be good to be rid of them entirely.

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