New Poll Shows Americans Prefer Fee-and-Dividend

03/18/2010 05:12 am ET | Updated May 25, 2011

Climate change is the most important issue of our time and what the US does to control carbon emissions may well be the most important decision we will ever make.

The bad news is we are on the verge of blowing it... big time.

Jim Hansen says in his new book (Storms of my Grandchildren) that the current approach favored by Congress for regulating carbon emissions, cap-and-trade, would be an unmitigated disaster for the environment; a huge mistake that we will never be able to recover from. He also points out that the alternative approach, fee-and-dividend, would help both the environment and the economy.

He's right. Why aren't we listening to him? We didn't listen to him when he first warned Congress about global warming in 1988. Now, when we acknowledge he was right, we aren't listening to him today when he is saying "cap-and-trade is the wrong way to solve this problem."

Likewise, the EPA regulators with the most experience with cap-and-trade say the same thing. In fact, two of them spent a lot of time to create a video about how bad cap-and-trade would be, which they appropriately entitled "The Huge Mistake."

Also, Annie Leonard, produced a very informative and entertaining video explaining why cap-and-trade isn't the right solution.

The fee-and-dividend approach has been ignored by Congress because they fear it would be perceived as a tax by the American public and thus politically unpopular. But now, a new poll shows that that perception is dead wrong: Americans actually prefer a fee-and-dividend approach to regulating carbon emissions and not cap-and-trade.

This was not surprising: the politicians in British Columbia thought a carbon tax wasn't politically popular so they made it an election issue. They lost heavily in the elections and reversed their position. They found out the hard way. Hopefully, with this new poll results, our members of Congress won't repeat the mistake they made in British Columbia.

Nearly every expert who has seriously compared the two approaches also prefers fee-and-dividend to cap-and-trade including all the experts who testified in front of Congress about this issue.

Fee-and-dividend helps our economy because 1) no dollars are sent overseas on dubious offsets, and 2) all the dollars are moved into the hands of people who are more likely to spend it which further fuels our economy. In short, fee-and-dividend helps the economy; cap and trade would hurt it.

Fee-and-dividend provides both 1) superior environmental benefits and 2) superior economic benefits compared to cap-and-trade. This is the "double dividend" that economists talk about with fee-and-dividend.

Fee-and-dividend has additional benefits:

  • it provides more flexibility for reducing emissions since there isn't a hard cap
  • it provides an on-going incentive to reduce emissions to zero compared to cap-and-trade which provides an incentive that stops when the cap is achieved, i.e., cap-and-trade provides a floor whereas a carbon tax has no floor
  • It provides price certainty which is critical for stimulating investment.

For these reasons and more, fee-and-dividend is preferred by:

  • Jim Hansen
  • Al Gore
  • the Congressional Budget Office (CBO)
  • the inventors of cap and trade
  • EPA regulators with the most experience with cap and trade
  • the economists who have done the most work on cap and trade
  • conservative economists
  • George C. Marshall Institute
  • Thomas Friedman
  • the American public
  • the Sierra Club
  • other environmental groups (who are only supporting cap and trade because they believed it was the only option on the table)
  • businesses including Exxon Mobil
  • and even the Chinese government!

Senator Boxer has said she is open to supporting a fee and dividend approach.

And it looks like other Huffington Post bloggers are coming to the exact same conclusion I did. For example, see Passacantando's Climate Train Wreck and Wysham's Cap And Trade Should Go The Way Of The DoDo Before We Do.

One of the commenters to Wysham's article said this:

The point that the video makes -- and which is made in much more depth in the excellent new report "Carbon Trading - how it works and why it fails" -- is not only that it doesn't actually deliver emissions reductions but it also comes at great costs - such as dispossession of indigenous peoples - whilst rewarding the main polluters. In that sense the US Cap and Trade scheme and other ones (in the EU and Australia) are anti-climate bills.

The world can not afford false solutions - so it is vital that everyone interested in environmental issues (including Levi above and some of the big environmental NGOs) stop being apologists for carbon trading and be part of a widespread movement demanding real solutions. There is a whole list in chapter 5 of the Carbon Trading booklet that offer a good starter.

The carbon trading report points out the following:

From its global beginnings as part of the Kyoto Protocol in 1997, carbon trading has failed to change the way we acquire and use energy, while short-circuiting demands for the fundamental reforms needed. In the process, it has rewarded polluters for continued pollution while at the same time causing social and environmental injustice.

Until environmentalists abandon the credo that 'it's too late to stop carbon trading now', they will be forced to continue to run through a repertoire of schemes to fix the unfixable - for example, certifying 'best practice' carbon projects, or instituting new sectoral markets to streamline and simplify the trade.

The report's solutions chapter is excellent.

Congressman Larson's bill is the approach preferred by most experts over cap-and-trade. But it has no traction in the Senate.

The Senate isn't listening to the experts or the American public. That's really a shame, because this is the most important issue of all time.