New Jobs and Clean Air in Rhode Island


High levels of unemployment continue to plague Rhode Island, and concern is growing over climate change impacts; but with all the hand wringing about these problems, one highly productive solution has been largely ignored.  A June 9, 2014, report entitled The Economic, Climate, Fiscal, Power, and Demographic Impact of a National Fee-and-Dividend Carbon Tax, commissioned by Citizens Climate Lobby (CCL), calculates that 2.1 million jobs will be added in the U.S. over the next 10 years by implementing an earmarked dividend back to taxpayers from a fee on carbon levied at the source.  Over 120,000 of those jobs will be added here in New England.  Rhode Island families and businesses will benefit from carbon fee-and-dividend.  This revenue-neutral solution is what we need.  It works elsewhere; it will work here, too.

A widespread assumption about levying taxes for pollution is that it would drive a dagger into the heart of the national economy. But, if done correctly, cutting carbon emissions will boost the economy.  Dividends paid to individuals and families result in increased spending over the whole economy.  Increased consumer demand boosts business hiring more directly than any other factor in the economy.  For example, according to the Energy Information Administration, states that participate in the Regional Greenhouse Gas Initiative not only cut their emissions more than non-participants, but also grew their economies at a higher rate, too.

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Rhode Island would not be the first to try to reduce its dependence on fossil fuel sources and pass the benefits back to users.  In British Columbia (Canada), which adopted a similar system in 2008, more than $5 billion has been brought in so far, and all of it has been returned to businesses and individuals. According to the B.C. Ministry of Finance, for individuals who earn up to $122,000, income tax rates in the province are now Canada’s lowest. 

The Green Communities Act (GCA), passed in 2008 by Massachusetts, also reduced greenhouse emissions while increasing employment.  In the 6 years the GCA has been in effect, more than 16,000 jobs were added directly due to the GCA.

The proposed Fee-and-Dividend (F&D) will charge carbon dioxide output at $10 per metric ton and increase by $10 per metric ton each year.  Because the fee goes up predictably over time, it sends a clear price signal to begin using fossil fuels more efficiently or replace them greener energy.  Also, border tariffs charged on imported carbon-consuming goods will level the playing field for U.S. corporations.  Fully 100 percent of the collections from the fees are returned to households based on how many people live in them (one share per adult plus one-half share per child with a maximum of two).  Because not everyone uses the same amount of carbon, the majority of American households (about 66 percent) are estimated to earn back as much or more than they pay in increased costs.

The F&D report was prepared for Citizens Climate Lobby by Regional Economic Models, Inc. (Washington, DC) and Synapse Energy Economics, Inc. (Cambridge, MA).  In addition to the 2.1 million jobs created, the report finds that carbon dioxide emissions are reduced by 33% by 2025 and 52% by 2035; and 13,000 premature deaths are averted by improved air quality from reduced sulfur dioxide (SO2) and nitrogen oxides (NOx) by power plants.

There are other important benefits by 2025.  F&D rebates will return nearly $400 billion to households – almost $400 per month for a family of four.  Electricity prices increase until that time and then start to decrease.  Gross domestic product increases $80-90 billion, rising in 8 of the 9 regions in the U.S.

This study shows there is no economic argument against carbon fee-and-dividend.  F&D creates jobs, grows the economy, saves lives, and makes Americans richer.  It does this while also reducing carbon dioxide emissions to two-thirds of 1990 levels by 2025, and to half by 2035.  F&D sets a new standard for climate and economic policy. 

Rhode Island families and businesses need carbon fee-and-dividend.  This revenue-neutral solution works.  For RI and the country, it’s time for strong bipartisan legislation in Congress to reduce our risks and grow our economy.

By David Fox, PhD

29 Orchard Avenue
Providence, RI 02906

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