Fee & Dividend as an alternative to Cap & Trade (Carbon Tax)

This article mentions a carbon pricing mechanism that’s new to me, though it has apparently been around for a while.


  1. A fee is charged at the point of origin or point of import on greenhouse gas emitting energy (oil, natural gas and coal).
  2. The fee is progressively increased.
  3. The fee is returned to households equitably and in full.

I can see the concept being easier to sell to the electorate than Cap & Trade (or Carbon Tax). “We’re going to charge business and give to families”. Sounds a lot like Robin Hood. :smile:

Of course, vested interests would make a lot of noise. Whether that would be enough to drown out the cash to the electorate angle, only time will tell. And, of course, the electorate has to accept the reality of anthropogenic global warming.

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David, this proposal looks very interesting to me.
The key points for me in this proposal are:

  1. Carbon fees at point-of-entry is easy to do, because there are a relatively small number of such points.
  2. The cost is expected to be passed on, but in doing so, all derivative costs go up in proportion to their carbon demands. Again, very efficient, because the costs just flow out through the economy.
  3. Consumers are given back 100% of the Carbon Fees in the form of direct payments to accounts. Again, quite efficient because governments are already good at this.
    The effect on consumers, is that if you are an average consumer of carbon derived product/services, there is a net zero effect on you, but you each have the opportunity then, to reduce your carbon footprint and profit directly. If you are a high consumer of carbon derived product/services then it’s going to be more expensive for you, but there will be ways to reduce that.

The incentives all seem right to me.
I like it.

BTW: link to a nice summary of the system is available at: http://www.mediafire.com/view/5f3j6rq78mfmr6a/FeeAndDividend.CliveEllsworth.July2014.pdf


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It’s a very interesting idea. It isn’t necessarily all that different from enacting a carbon tax and using the revenue to fund negative income tax (which is sort of what we propose now). But the carbon tax was destroyed on presentation and perception and this has potential to be more inherently appealing.

Two things that might need to be looked at:

  • It seems like it would increase energy costs for domestic businesses without compensating them. Imported stuff would become cheaper relative to Aussie-made.
  • It only charges for carbon inputs in the domestic economy. Firms could avoid those charges by exporting the coal/gas (Australia is unusual in that most of our emissions are already exported so the infrastructure for it is well established and easily accessible).

Seems like an idea with plenty of potential but which would need to adapted to work well in Australia. As a party with a pre-existing basic income concept we can probably do more with this than most others.

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I agree with @AndrewDowning and @MarkG’s comments above but would add one (1½?) point(s) they did not mention, and that is the whole scheme is predicated upon trust in the government to dole out the “return” fees equitably (and indeed for parties not to “game” the system e.g. multiple registrations for corporations, “friends of the party” etc. etc.)

You know; all those nefarious little activities which just happen to be in the news just lately… Oh hell, you can just tell I’m from N.S.W. can’t you?