The Science Behind a Carbon Fee & Rebate: It’s About Justice

The Science Behind a Carbon Fee & Rebate: It’s About Justice

Written by interns Danniele Fulmer, Maria Zlotescu, and Olivia Kuykendall 

At the heart of any campaign that combats climate change, there should be a dedication to justice and equity. The proposed D.C. carbon fee and rebate policy is a wonderful example of this dedication to a cleaner, more equitable future. Backed by economists, environmentalists, and social justice activists, this policy can help all the District’s residents, especially the most vulnerable.

And now, two new economic studies show how and why the rebate portion of this policy is essential to addressing justice.

It has long been established that carbon and rebate fee models can be used to reduce carbon dioxide emissions to combat climate change. Carbon pricing has also been embraced as the most effective solution by economists. In the 2015 report, “Expert Consensus on the Economics of Climate Change,” a survey found that 75% of economists agree that market-based mechanisms, such as a carbon tax, are the best way to address climate change.

Now, two new studies demonstrate that carbon fee and rebate policies can have economic benefits while also addressing justice. In particular, these studies, conducted by Boston College and the University of Massachusetts Amherst, found that fee and rebate models can lead to a substantial decrease in income inequality. The studies both bear well on our efforts to put a price on carbon in D.C. through a fee and rebate model.

The first study, titled “Income Inequality and Carbon Emissions in the US: A State-Level Analysis,” found that there is a direct correlation between the concentration of wealth and carbon dioxide emissions. Basically, the higher the income equality in any given state, the likelier it is for the state to have higher carbon dioxide emissions, as is demonstrated by the tables below.  


Additionally, the Boston College study notes that a carbon tax without a built in rebate could harm low-income communities. But with a rebate, this type of policy has the potential to benefit a larger portion of an area’s population. The study found that if a $200 tax per ton of carbon were adopted without a rebate, the bottom quintile of households would suffer 10.2% income loss. However, with a built-in rebate, the bottom quintile would see a 14.8% gain in income.

Luckily, the D.C. carbon fee and rebate policy plans to do just that, by rebating 75% of carbon revenue back to D.C. residents, with other portions reserved for renewable energy projects and local business property tax assistance.

The second study, “A Distributional Analysis of a Carbon Tax and Dividend in the United States,” published by the University of Massachusetts Amherst, compared carbon fee and rebate programs with other climate solutions such as cap and trade and tax breaks. The basic finding was that cap and trade, as well as tax breaks, could benefit higher income individuals disproportionately, leading to regressive impacts on lower and middle-income individuals. Furthermore, regressive tax measures have a tendency to reduce spending in regions, resulting in a decrease in economic activity. However, the researchers yet found that carbon fee and rebate policies have the potential to empower citizens through income gains, resulting in an increase in purchasing power and higher economic activity. More specifically, the study showed that distributing equal rebates can protect the purchasing power of 61% of individuals, 89% of which fall under the lowest income category.  This goes to show that utilizing a carbon fee and rebate model is truly the most equitable way to address climate change.

By looking at the proposed D.C. carbon fee and rebate policy against this backdrop, we can see that one of the most critical elements of the policy is the rebate mechanism, which prevents regressive outcomes.

When considered together, both of these economic studies support the idea that a carbon fee and rebate policy is the most efficient and just mechanism to address climate change, which is great news for the D.C. carbon fee and rebate campaign!

We have environmental and economic experts on our side. Now we must build our movement to get this policy passed in the District.

This campaign has been in the works for two years now and there is no doubt that the overwhelming body of support from economic, environmental, and social justice standpoints will continue growing from here. Over 20 cities and states are currently either voting on or following a carbon fee and rebate plan. Environmental experts already support carbon fees as a way to reduce CO2 emissions. Politicians from both sides of the aisle also endorse the idea. The carbon fee and rebate bill would not only be environmentally effective, but economically beneficial as well. According to leading environmentalists, in order to prevent irreversible damage to the environment, the U.S. must eliminate carbon pollution entirely by the end of the century. The carbon fee and rebate policy will go a long way to meeting that goal.

Article Citations:

  1. Fremstad, A. and Paul, M.. “A Distributional Analysis of a Carbon Tax and Dividend in the United States.” Working Paper Series, Political Economy Research Institute (2017).
  2. Jorgenson, A, et. al. “Income Inequality and Carbon Emissions in the US: A State-Level Analysis.” Ecological Economics 134 (2017) 40-48.
Landmark Study Finds Carbon Fee-And-Rebate Policy Would Boost D.C. Businesses, Families, and Economy

Landmark Study Finds Carbon Fee-And-Rebate Policy Would Boost D.C. Businesses, Families, and Economy

WASHINGTON, D.C. — On Thursday, July 27, a new draft study detailed how a carbon fee-and-rebate policy would benefit the local economy of Washington, DC. According to the study’s findings, the policy — being proposed by the “Put A Price On It, D.C.” coalition — can effectively reduce carbon emissions in the District while maintaining economic growth and job creation, and putting more money in the pockets of DC residents.

The independent analysis, titled “Assessing Economic Impacts of a Carbon Fee & Dividend for DC,” was carried out by the Center for Climate Strategies (CCS) and shared at an event hosted by Regional Economic Models, Inc. (REMI). The draft study found that the policy would result in a steady boost in jobs — particularly in the construction sector — and stable economic growth, while reducing planet-warming carbon emissions 23 percent by 2032 for electricity, natural gas, and home-heating oil consumed in the District. Transportation emissions also fall under this examined policy.

Roger Horowitz, Co-Founder of Pleasant Pops, stated: “With the carbon fee-and-rebate policy, DC has the opportunity to become a national leader on climate action in a way that is equitable and just — and good for our business. Putting a price on global warming pollution and rebating the revenue to families will keep our business going and improve the health of our community.”

“Zenful Bites is proud to be part of the ‘Put a Price on It D.C.’ coalition. This policy will expand our customer base and make our city a healthier, safer place to live. We’re happy to help move this campaign forward for a more sustainable economy,” said Josephine Chu, Co-Founder of Zenful Bites.

The study modeled the indirect and induced changes that occur throughout all sectors of the DC economy as businesses, households and the government respond – not only to the fee itself, but also to the newfound money available from the return of that fee every month. The analysis projects that, by 2032, the policy would generate a rebate of $170 per month for the average family of four and $294 per month for a low-income family of four. This gradually rising rebate would increase residents’ support, thereby increasing the policy’s durability.

“We support this because it would spur companies like ours to dramatically increase their investments in clean energy, while leaving more money in the pockets of DC residents to reinvest in local businesses, restaurants and services,” said Tom Matzzie, Founder and CEO of CleanChoice Energy.

The proposed policy would redirect a portion of the revenue raised as tax relief to small businesses. This will total $30 million per year by 2032, thus enhancing the ability of local businesses to remain competitive in the region and to maintain a permanent and robust presence in the city.

“The numbers clearly show that a carbon fee-and-rebate policy is not only the best option to reduce D.C. carbon emissions, but also a sound mechanism for growing a robust economy powered by clean energy,” said Mishal Thadani, Co-Founder of District Solar. “This policy is simple, fair for every stakeholder, and will ultimately attract many new and innovative companies to the District.”

We marched. Now, we act!

We marched. Now, we act!

The past few weeks have been HUGE for D.C.’s number one climate campaign. First, we marched with a couple hundred thousand of our closest friends. Then, we unveiled the details of our policy at our campaign launch with a huge show of support!

Now, it’s time to ramp up our efforts. We need to encourage D.C. Councilmember Mary Cheh to introduce a bill for a carbon fee and rebate, and to pass it this year. To do that, we need your help! The bill we are proposing would make fossil fuel polluters pay for the real and damaging costs of their emissions with a steadily-rising fee on carbon. The majority of the money raised would be returned—through a quarterly “rebate”—to every D.C. resident, with additional support to low-income District residents. This “fee-and-rebate” approach would also include critical investments to help small businesses, transit and more. Read the details here.

D.C. families would benefit both economically and environmentally from cleaner air and water, new jobs created in energy efficiency and renewable energy, and more money in their bank accounts.

Councilmember Cheh has spearheaded the quick passage of sustainability policies in the past, such as the Renewable Portfolio Standard (RPS) Expansion Amendment Act of 2016, which sets a goal of increasing D.C.’s clean energy use to 50 percent by 2032.

However, we are not on track to meet the city’s overall greenhouse gas goals. That’s why we need a strong, economy-wide policy like a carbon fee and rebate.

Now it’s time for us to ensure Councilmember Cheh continues to be a progressive champion on our issues, while helping D.C. meet ambitious sustainability goals! Councilmember Cheh wants to hear from her constituents, so the best thing you can do is contact her directly.

Send a message to Councilmember Cheh thanking her for her leadership and asking her to support our carbon fee and rebate policy.

We marched. We rallied. Now we organize. Our moment is now.

Voices from the Peoples Climate March: Why We Need A Carbon Price

Voices from the Peoples Climate March: Why We Need A Carbon Price

Guest post from DC resident Roger LeBlanc, Jr.

Culminating a year of of people-powered resistance, more than 200,000 people marched in DC and around the world on April 29 to wake up our society to the climate crisis. People across many generations, backgrounds, faiths and communities stood up to say that enough is enough with polluters threatening the health of our humanity

I spoke with two protesters and DC Ward 5 residents about why they were motivated to march. Continue reading

D.C. Residents to Take Action at City Hall During Peoples Climate March to Advance Local Climate Justice Campaigns

D.C. Residents to Take Action at City Hall During Peoples Climate March to Advance Local Climate Justice Campaigns

Tens of Thousands Will Call on D.C. City Council to Cut Ties with Wells Fargo and Put a Price on Carbon, as They Pass John A. Wilson Building During March for Climate, Jobs, and Justice

WASHINGTON — On April 29 during the Peoples Climate March, two D.C.-based climate justice campaigns will engage tens of thousands marching down Pennsylvania Ave. past the John A. Wilson Building to call on D.C. City Councilmembers to support two related campaigns for climate justice. One campaign, led by 24 local organizations in the “Put A Price On It D.C.” Coalition, aims to place a fee on carbon emissions and equitably rebate the revenue back to D.C. residents. The other, led by the D.C. ReInvest Coalition, is advocating for D.C. to divest city funds from Wells Fargo over its investments in the Dakota Access Pipeline. Volunteers will display banners on the steps of City Hall, lead chants and speeches, and distribute flyers giving marchers instructions to take action.

The action will take place during the highly-anticipated March for Climate, Jobs and Justice, where tens of thousands of climate justice activists will march against Donald Trump and his climate science-denying cabinet. D.C. ReInvest Coalition and the Put a Price on It D.C. Coalition are joining forces to ensure that this national mobilization remains rooted in local campaigns for climate justice and propels its host city forward. Continue reading