A key piece of President Joe Biden’s plan to address climate change in his Build Back Better plan appears to be dead. The Senate should replace it with the bipartisan-supported, industry-supported, market-based carbon fee and dividend program.
The Biden proposal, known as the Clean Electricity Performance Program, would have rewarded energy suppliers who switch from fossil fuels like coal to clean power sources like solar, wind and nuclear power. West Virginia Senator Joe Manchin doesn’t support using taxpayer dollars to pay private companies to do things they’re already doing. Manchin is half right.
The carbon fee and dividend, which we have endorsed several times in the past, is a scalpel to Biden’s blunt instrument. The program imposes fees on everything used or produced in the United States based on the greenhouse gas emissions associated with their creation.
One hundred percent of the fees collected would be disbursed in the form of a dividend to consumers affected by higher costs in the marketplace — mostly lower-income consumers.
This would correct imperfect market forces to incentivize production of cleaner products: Produce a cleaner product, pay a lower fee. Zero net impact on consumers.
Right now greenhouse gas emitters are getting a free ride, a subsidy on their pollution that will be paid by our children and grandchildren to mitigate the effects of climate change. Charging emitters a fee (small at the outset, becoming increasingly painful over years) corrects this market failure.
This fee would drive up prices, but the dividend back to all Americans with the revenue generated by the fee would make it budget-neutral. Consumers could use the money as they saw fit, with some choosing products that require less fossil fuels to produce that would also be less expensive.
The beauty of this policy is it isn’t mandating adoption of specific renewable energy technologies. These mandates, like the 20% renewable mandate enacted by voters in Colorado and increased by the legislature, can have negative impacts that drive up energy costs.
This policy introduces a market mechanism that would allow the vast multitude of existing and new technologies and policies to compete in the marketplace. Better technologies would win out based on the free market and solutions like coal to gas switching would also be incentivized.
This idea isn’t a new one, the Citizens’ Climate Lobby and its local chapter have been advocating for it for years, but it feels like now would be the perfect time to implement it. It would play a major part in reaching Biden’s goal to reduce carbon emissions by 50% by 2030.
It also has been getting support from Republicans who see it as a more market-based solution than “command and control” methods. While the chances of a Republican backing the Build Back Better bill are basically zero, Manchin may appreciate the history of bipartisanship around this policy proposal.
We’re already seeing the negative effects of climate change right here in Western Colorado. The fires and mudslides that have caused long closures of I-70 in Glenwood Canyon the past few years are costly for our local businesses. The drought drying up or reservoirs is a problem that is only going to get bigger and more costly over time.
A carbon fee and dividend program has not been added into the Senate’s Build Back Better bill, but we believe it should be. We’re calling on our Senators Michael Bennet and John Hickenlooper to back this proposal and get it in the bill.