The Energy Innovation and Carbon Dividend Act in the USA

The Energy Innovation and Carbon Dividend Act in the USA

Question:  What’s in the bill?

Answer: The Energy Innovation and Carbon Dividend Act, the first bipartisan climate legislation in a decade, has been reintroduced as H.R.763. [1] It’s based on a CCL framework to account for the hidden costs of burning fossil fuels. If enacted into law, this policy will drive down greenhouse gas (GHG) emissions by stimulating American innovation and ingenuity. Scientists and economists alike [2,3] say it’s the best first step to reduce the impact of global warming.

Here’s how it works:

  • A carbon fee is placed on coal, oil, or natural gas as it enters the U.S. economy.
  • The fee starts at $15 per metric ton of CO2 and increases by $10 – adjusted for inflation – every year until GHG emissions are reduced by 90 percent.
  • All of the money is recycled to American residents in equal monthly carbon dividends, helping consumers adapt while businesses compete to reduce their carbon footprints.
  • If emission cuts don’t meet mandatory targets, the annual increase can be raised to $15.
  • A carbon border fee adjustment is placed on emissions-intensive goods that are imported or exported. This discourages businesses from relocating to where they can pollute more, and also encourages other nations to price carbon.
  • This policy would supersede a narrow subset of GHG regulations [4] for 10 years, but if GHG emissions haven’t been cut 30 percent by then, the EPA would be obligated to issue new rules to put us back on track. All other Clean Air Act regulations remain in full force.

Because the steady increase in fossil energy prices is predictable, it will stimulate invention and investment to cut carbon in myriad ways. Consumers will know they can count on increasing dividends to help them through the transition to a world of clean, energy-efficient goods and services.

  1. H.R.763 – Energy Innovation and Carbon Dividend Act of 2019. (24 Jan 2019).
  2. Hansen, J. “Fee and Dividend.” Earth Institute, Columbia University (8 Feb 2017).
  3. “Economists’ Statement on Carbon Dividends.” Wall Street Journal (16 Jan 2019).
  4. “Regulation Database – New Source Performance Standards for GHG Emissions from Electric Generating Units.” Columbia Law School, Sabin Center for Climate Change Law (accessed 10 Feb 2019).