Aussie households would receive money in the bank, each month. This cushions them from rising prices/This enables them to better meet cost of living demands.

According to the CCL USA study:

”Most recipients would get their carbon cashback payments in the form of a direct bank deposit or as money added to an existing government-issued debit card, with paper checks as a backup. Eligibility changes – births, deaths, adoptions, age changes – would be taken care of on a monthly basis, and any discrepancies between the money they are entitled to and what they have received would be reconciled on the next income tax return.”

More info here: citizensclimatelobby.org/laser-talks/carbon-dividend-distribution/

First, simplicity: Transferring money from fossil fuel companies to Australian citizens is easy to understand as the money doesn’t go into government coffers. Simpler policies like this have higher integrity.

Second, political will: Receiving cash in the bank every month means people across the political spectrum will feel more inclined to support the (ongoing increase in fossil fuel prices.) idea/plan/efforts to reduce emissions/reduce pollution.

No. The net benefit for each household will depend on its reliance on carbon-intensive products. Put simply, poorer households would be better off, the average household would gain, and some wealthier households would be slightly worse off. remain the same/would be unaffected.

In the 2018 paper linked above, Prof. R. Holden and R. Dixon from UNSW developed a model to simulate the effect of the ACD on Australian society. They found that the average household will gain from the scheme. Moreover, the economic benefits were found to be the highest for households in the lowest income bracket. (Only households with above average income would be negatively affected by the scheme.)

The dividend ensures that those least able to afford the transition are included in the process and consequently enables the whole population to move forwards.

Yes!

A variant of carbon fee and dividend has been modelled by UNSW and presented as the Australian Climate Dividend Plan. In the United States, a comprehensive study was undertaken by Regional Economic Models, Inc. (REMI) and found that under a carbon fee and dividend scheme:

• Carbon emissions from fossil energy would decline 33% after 10 years, and 52% after 20 years, relative to 1990 levels;

• Economic activity would be stimulated by 5% over ‘business as usual’;

• 66% of people would be better off financially.

• 100% of low- and middle-income households would be better off financially.

With 100% of net revenue returned to households and a significant majority of consumers coming out ahead of rising costs, people would have more disposable income, which would encourage spending, stimulate the economy and expand total investment in the energy economy.

Between about 2007 and 2010 there was bipartisan political support for carbon pricing in Australia. What is generally understood to have happened subsequently is that international failure to agree on a path forward led to a critical dip in support for what could have been perceived as Australia taking a lead on climate action.

Post-Paris, there is far greater momentum for carbon pricing, including in China. There has also been a revolution in renewable energy technology and its uptake, and mainstream business and community opinion have become more supportive of reform.

Unfortunately, the climate dividend was unheard of in Australia when the former political bipartisanship collapsed. CCL believes that the dividend to households proposed as part of the the climate dividend model, and the simplicity and transparency of the scheme, would improve the potential for achieving a return to bipartisan support for a solution to climate change. The climate dividend is easy to explain. People are more likely to understand it, and there would be even greater trust if specifics like dividends to households were clearly enshrined in law.

With a climate dividend, 100% of the money collected in fees would be recycled into the economy via the dividend paid each month to households. In the US, REMI modelling strongly suggests that most households would be financially better off if a climate dividend were implemented, and we expect the Australian economy likewise would benefit from an Australian climate dividend.

In the US, 84 members of Congress – 50% Democrats and 50% Republicans – have formed a Climate Solutions Caucus. This Caucus addresses the urgent need to foster respectful bipartisan dialogue as a way to help solve dilemmas of climate and energy policy like the very severe and complex ones Australia faces today.

Bipartisanship would help create effective and durable policy, which is an important expectation of the business community in particular, many members of which are waiting for an(d) already factoring in a rising carbon price. (But the expectation of an effective and durable policy on mitigation of climate change extends far beyond just the business community.)

Bi-partisan (multi-partisan) support means longevity for the proposal. Without it, good policy can be repealed, as we saw here in Australia in 2014. The dividend turns a contentious policy into something palatable for all sides. Indeed one of the architects of the carbon fee and dividend, Ted Halstead, called it “A Climate Solution Where All Sides Can Win”

Carbon pricing requires legislation to enable the regulation of carbon emissions, preferably at the national level. Such legislation would put a fee on carbon dioxide equivalents attributable to the use and extraction of fossil fuels. This fee would be assessed at the fuel’s source: the mine, well or port of entry. The fee would start out low and rise annually in a predictable manner until Australia reaches a ‘climate-safe’ level of emissions – 90% below 1990 levels.

A government agency would be responsible for collecting and distributing the funds.

The (fee would be collected at source and all) fees collected, minus administrative costs, would then be reimbursed directly to all Australian households. This would shield them from the financial impact of the shift to a cleaner energy economy. Their spending will stimulate the economy towards increasingly cheaper low carbon activity and make high carbon activity increasingly expensive. This enables citizens to participate in decarbonising the economy by spending on low carbon alternatives. .

Because the fee and the price of fossil fuels would go up predictably over time, CFD would send a clear price signal to investors, consumers, businesses, and the wider economy to:

• Use fossil fuels more efficiently;

• Replace fossil fuels with low- or zero-emissions energy;

• Invest in low-emissions technologies; and

• Bring the true cost of fossil fuels onto the balance sheet.

This would:

• Internalise the social costs of fossil fuels into their price, thus phasing out the implicit subsidies that derive from fossil fuels being allowed to pollute for free

• Increase the demand for low-emissions products, making them increasingly more affordable;

• Drive growth in the new economy;

• Reduce greenhouse gas emissions, thus stabilising the climate, improving human health and restoring the health of the oceans.

No. Collecting a fee from fossil fuel producers and importers would be a relatively simple as the number of companies affected is fairly small. The costs of collecting and administering fee and dividend would be paid out of the fees collected.

Yes. By returning the net revenue back to households — the end-users — consumers would be able to pay the higher prices of goods and services caused by the higher price of fossil fuels. This would allow businesses, farmers and manufacturers to pass on their increased costs and maintain their market share.

Each year that the carbon (tax) fee increased, the dividend would rise as well. Everyone would be on a level playing field for the first few years. But if businesses failed to become more energy-efficient and failed to reduce their emissions, they would become less competitive and lose market share. Conversely those businesses who diversify and become more efficient are rewarded for their efforts.

Market forces would therefore drive innovations in low-emissions technology, creating new business opportunities to develop, produce, install and service these products. This would create thousands of new jobs here in Australia. Companies would be able to sell these technologies globally and become more energy-efficient themselves, thereby becoming more competitive worldwide.

Brilliant

The clear price signal provided by the Climate Dividend would drive many of the changes that currently require complex legislation and regulation at higher cost. It will enable the market forces to make the many choices needed to decarbonise our economy. It will enable an orderly phase out of many high carbon products and services and enable business and consumers alike to transition with minimal regulation and funding.

For example, the electrification of transport, heating and cooling, and industrial production will occur naturally due to market forces. Fossil fuels will phase out relatively smoothly as renewables become more abundant. Fossil fuel companies will be able to reinvest in low- or zero-carbon activities and avoid the high risk of crashing as the economy decarbonises around them. It will also reduce the risk of Australia being left with stranded assets.

A Climate Dividend would provide a firm foundation for the many complementary policies that will be required to decarbonise our economy. For instance, the Safeguard Mechanism, designed to reduce industrial emissions, will be less onerous because the fossil fuel component of their emissions will have been priced at source. The mechanism can therefore focus on non-fuel related emissions such as those that come from cement production.

Some less efficient polices will become redundant. The Emissions Reduction Fund which uses taxpayer dollars to buy carbon abatement from emitters would no longer be necessary. Risky carbon offsets would become less necessary and carbon removal technologies can be dedicated to mopping historical emissions instead of offsetting current ones.

State governments have provided most of Australia’s decarbonisation polices in recent years. They will be able to re-evaluate their programs and drop or amend the ones that would be covered by the Climate Dividend. This will free them up to focus on the ‘hard to abate’ parts of their economies.

Importantly, the Climate Dividend would enable Australia to decarbonise ahead of its Paris Agreement schedule and take a leading role in the global race to zero emissions.