Sabrina Melendez: A fee and dividend model of carbon pricing

Editor’s note: This commentary is by Sabrina Melendez, a student at Bennington College who is a part of the Bennington Environmental Action Group and a member of the Bennington Climate Advocates, Bennington’s local 350 chapter . She is a student fellow with Our Climate, which works to battle climate change with policy solutions.

Imagine getting a $500 check in the mail once a year. Imagine that everyone else in your neighborhood or town receives the same exact $500 check, regardless of their income or economic status. To top it off, imagine that merely receiving this $500 check is in some way helping to reduce the worst effects of climate change, creating a better future for generations to come. This is what is means to put a price on carbon.

As a climate activist, I can say that carbon pricing is a hard sell, especially in Vermont. We used to call it a carbon tax, until we realized that it gave individuals the impression that they would be taxed for their carbon emissions. Indeed, it makes no sense to tax individuals for their carbon emissions because individuals are not to blame for Vermont’s carbon footprint. Most Vermonters care about climate change and would take steps to reduce their carbon emissions if it was economically feasible. A price on carbon is not asking for extra money from already struggling middle- and low-income Vermonters. A price on carbon is asking for extra money from large-scale billion-dollar fossil fuel corporations that exploit Vermonters’ dependence on fossil fuels and leave us with no other option but to slowly degrade our own environment.

Of course, we do not deny that the same fossil fuel corporations that have managed to exploit rural Vermonters will pass down the carbon price to the consumer in order to avoid losing what, for a large fossil fuel company, is petty cash. Unlike climate activists and everyday Vermonters, the billionaire CEOs of ExxonMobil and Shell are not concerned with the disproportionate burden that raising gas prices would have on low- and middle-income Vermonters. This is why we propose a fee and dividend model of carbon pricing, the most widely approved climate policy by Republicans and Democrats alike. A fee and dividend model would tax the carbon emissions of fossil fuel companies at the extraction and distribution level, and the money from those taxes would be returned to the people of Vermont in order to make up for higher gas prices, aka, a $500 check in the mail. (source: Regional Economic Modeling Inc.)

The percentage of carbon price revenue that goes back to the people varies according to different proposals by different climate groups and legislators. Some propose a revenue neutral carbon price, which would return every dollar generated back to the people of Vermont in forms of checks and rebates. Others see a price on carbon pollution as a way to fund other climate solutions. The latter group has proposed a 90/10 split in which 90 percent of the carbon pricing revenue is returned to the people of Vermont, and the other 10 percent is used for funding climate action projects such as low-income weatherization, renewable energy, and carbon sequestration projects, as well as lowering taxes for individual Vermonters.

In short, climate groups are not interested in “imposing a carbon tax on our workforce” as Gov. Phil Scott said in a statement he released on Sept. 26. The statement was in response to the newly established Climate Action Commission’s “listening tour,” in which carbon pricing was repeatedly suggested by a wide array of local Vermonters as the most feasible and just way to address the climate crisis. In Bennington County, 40 out of the 48 Vermonters who spoke advocated for carbon pricing. If Gov. Scott refuses to consider a carbon price that will actually help low- and middle-income Vermonters, then the Climate Action Commission serves no purpose but to smile and wave as climate change disproportionately targets low and middle-income Vermonters in the years to come.

This summer, Scott made a commitment to preserve the future of Vermont in the face of human-caused climate change. Will he be bold enough to follow through? Will we be bold enough to make him?

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