New US Economic Study Shows Carbon Tax Refunded to Households Would Create Jobs
As recent reports on the impact of climate change underscore the need to reduce greenhouse gas emissions, a new study finds that a tax on carbon can reduce those emissions while also adding jobs to the economy.
The study, conducted by Regional Economic Models, Inc., examined a tax on the carbon-dioxide content of fossil fuels. The tax would start at $10 per ton, increasing at $10 per ton each year. Revenue from the tax would be returned to households in equal shares as direct payments. Under this approach, the REMI study found that recycling the revenue back into the economy would add 2.1 million jobs over ten years. Improvements in air quality would save 13,000 lives a year. Emissions would decline by 33 percent.
“Detractors have said that a carbon tax will kill jobs,” said Mark Reynolds, executive director of Citizens Climate Lobby, which commissioned the study. “The REMI study turns that assumption on its head.”
Last month, the National Climate Assessment reported that the impact of climate change is already being felt across the nation in the form of severe drought, rising sea levels, extreme weather, wildfires and heat waves. To reduce future risk from climate change, the Obama administration last week unveiled new regulations from the Environmental Protection Agency limiting carbon emissions from power plants.
“If Republicans don’t want more EPA regulations, their best recourse is to deliver a revenue-neutral carbon tax, which is supported by conservatives from George Shultz to Greg Mankiw,” said Reynolds. “With the REMI study showing a carbon tax that returns revenue to households will add millions of jobs, this is the option everyone can embrace.”
NAFTA provisions keep the American and Canadian energy economies closely intertwined. The National Manager of the Citizens’ Climate Lobby in Canada remarked, “It just takes one country to take the lead on carbon pricing and we can turn the page.”
MP Bruce Hyer (Thunder Bay – Superior North) is championing a revenue neutral carbon tax that refunds households, called carbon fee and dividend. On May 26, in the House of Commons, MP Hyer said this, “Carbon fee and dividend almost does it all. It prices carbon fairly and scientifically, uses only free market forces to foster CO2 reductions, costs virtually nothing to administer, benefits lower income Canadians and, what should appeal to that side, no money goes to the government at all.”
Since 1980, Regional Economic Models, Inc. (REMI) has provided economic impact studies for governmental and private-sector clients including the Atlanta Regional Commission (ARC), consulting firms Booz Allen Hamilton and Ernst & Young, the Massachusetts Institute of Technology (MIT), and the Tennessee Valley Authority (TVA).
Click here for a copy of the REMI study.