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Carbon fee and dividend

Often, environmental measures are cast as the enemy of business and growth. “We’d like to pollute less, killing fewer people”, politicians say, “but that might make some numbers in a spreadsheet smaller than they would otherwise be”.

That doesn’t have to be the case. Improving our ability to live in the biosphere we have can be a source of economic growth, as witnessed by the jobs renewable energy is creating.

Another proven economic growth enabler is a carbon fee and dividend (CFAD). The idea is that a fee on CO2e emissions is imposed at the source – the mine, well, or port of entry. The collected fee is divided equally among all households and paid as a monthly dividend.

In practice, it means you might pay an extra dollar or two per gallon at the gas pump, in exchange for a monthly check for hundreds of dollars. I don’t know about you, but I’d take that trade-off.

CFAD is unusual in that it works for basically everyone. It’s effective at reducing greenhouse gas emissions. It doesn’t require excessive bureaucracy or large government. It’s business friendly, as it creates a stable and predictable environment, perfect for investment into low-carbon technologies. And it puts disposable money back into the hands of the majority of the population, spurring economic activity and reducing the impact of adjusting to climate change.

And, we know it works. British Columbia introduced a carbon fee and dividend in 2008, and increased it in 2014. Since the introduction, their carbon emissions per person have fallen 10%, while their economic growth has been higher than the rest of Canada.

A carbon fee and dividend is a practical measure for addressing climate change that should be enthusiastically supported by both left-wing and right-wing political parties in every country. It’s a pro-business and pro-citizen measure that has a chance to really work.

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