Wouldn’t it be wonderful if, instead of a regulatory approach to climate change, as recently proposed by the Obama administration, there was a market-based approach? Wouldn’t it be even more wonderful if such an approach also created jobs and grew the economy, especially here in Michigan? A steadily increasing fee on carbon that returns 100 percent of revenues generated to American households would do just that!
It is frequently touted that “what is good for the environment is bad for the economy,” but a recently released study from Regional Economic Models, Inc (REMI; http://www.remi.com/ ) blows that contention away. This study looks at the effects of a steadily increasing fee on carbon, (beginning at $10 per ton of CO2 emitted and increasing $10 per ton annually), that returns 100 percent of revenues to American households (carbon fee and dividend (FAD) or a “revenue-neutral” carbon tax). The results of the study are startling.
Such a fee on carbon would tax corporations based on the amount of CO2 emitted by their product, while returning all the revenues in equal shares to American households in the form of monthly dividends. Because corporations would pass the costs of these fees on to the consumer, it is important to note that most families, especially low- and middle-income families, would receive more in monthly dividends than costs are projected to increase because of the tax. According to the newly released national REMI study, such a FAD system would:
n Create 2.1 million jobs after 10 years and 2.8 million jobs after 20 years ( a less than 1 percent increase in total US employment).
n Increase the gross domestic product by $70-85 billion annually with a cumulative increase in national GDP of $2.375 trillion.
n Save 13,000 lives annually after 10 years with a cumulative 227,000 American lives saved over 20 years.
When compared to other regions in the country, job growth is greatest in the Midwest.