I was pleased to see an article this week about optimism surrounding the Clean Power Plan. The plan requires that Arkansas reduce carbon dioxide emissions from existing coal plants by 44 percent by 2030 (not 2020, as per the article) and seems to assume that this would be done through regulations.
Four of us from Fayetteville Citizens' Climate Lobby just returned from Washington, D.C., where we attended the national Citizens' Climate Lobby conference and spoke with every Arkansas senator and congressman.
It's nice to be from Arkansas. Our members of Congress are welcoming and courteous. We were received graciously, even by congressmen in whose districts we were not constituents. A few of the congressmen spoke sincerely and knowledgeably about their environmental concerns, wanting to preserve our clean air and water. Their energy aides took notes about the policy our group supports, Carbon Fee and Dividend.
These meetings are confidential, so I can't go into detail about our discussions, but the subject of regulations versus carbon pricing came up a few times in regard to the best method to reduce carbon emissions.
The simplest, most transparent and workable solution to reducing carbon emissions, a Carbon Fee and Dividend, was not mentioned in Monday's article. The EPA Clean Power Plan offers four options to reduce emissions, including efficiency, using more natural gas and/or more renewable energies or using a market-based pricing mechanism, such as Cap and Trade or Carbon Fee and Dividend.
A Carbon Fee and Dividend works like this: At present, the fossil-fuel companies that are polluting our air and water aren't currently paying for this destruction of our commons. We are paying the costs, with our health and efforts to recover from weather disruptions, over $150 billion a year. This is a market failure.
So these companies pay a fee to account for this market distortion, at the mine, well-head or port of entry, on the amount of carbon in the fuel, and 100 percent of the money collected is returned to the consumer, minus minor administrative costs, less than 1 percent.
A study by Regional Economic Models Inc. (REMI), a nonpartisan economic modeling firm with 30 years' experience, has determined that a national Carbon Fee and Dividend beginning at $10 per ton of CO2, and rising by $10 a year, after 20 years would create 2.8 million jobs above baseline, save 227,000 lives and add a cumulative $1.375 trillion to our gross domestic product. Carbon emissions would be lowered by over 50 percent over 20 years. Looking at the power sector alone, emissions would lower by over 90 percent below 2005 levels by 2030. We improve our economy while lowering emissions. If carbon emissions are reduced, the process would also reduce toxic pollutants which make up the haze in the Upper Buffalo and Caney Creek wilderness areas.
Regulations would also work, but are unpopular with fiscal conservatives. This is not without good reason. If Arkansas were to use regulations alone to meet the EPA Clean Power Plan requirement, the economy could be negatively affected because there would be no dividend returned to the consumer to help tighter budgets meet the higher fuel costs. Businesses have no hope of recouping the costs on goods they ship abroad.
A Carbon Fee and Dividend is a conservative market-based approach to reduction of carbon emissions. It is being currently being written into the budgets of Shell Oil, Exxon-Mobil, Wal-Mart, Microsoft and many other companies because they see it as inevitable and less costly than regulations. It also includes a border adjustment on goods being imported from countries without a Carbon Fee, which removes any incentive for businesses to relocate operations to countries more permissive on emissions. U.S. companies who have already paid the fee here would get a rebate at the border.
The state can enact its own Carbon Fee and Dividend. Fayetteville Citizens' Climate Lobby is currently gathering funding to have a REMI study done of the impact of Carbon Fee and Dividend on Arkansas specifically. Also, one or more of our U.S. congressmen or senators can sponsor a bill creating a federal-level Carbon Fee and Dividend, which would make regulations unnecessary.
We have very little time. The utilities in Arkansas are concerned that EPA's timeline for complying with the Clean Power Plan is unrealistic.
But let's really be realistic. Climate change isn't waiting for us to finally get it together. The Antarctic is melting. the Arctic is releasing methane, water sources are threatened as glaciers disappear, Alaska is burning and California is drying up.
A Carbon Fee and Dividend would create a clear market signal speeding up the development of low carbon-intensive energies, such as nuclear, some natural gas, solar, wind, biofuels, etc. A carbon price will determine the technological low-carbon winners, while we all are the winners of a cleaner, safer world with an intact economy.
Shelley Buonaiuto of Fayetteville is co-chair of the Fayetteville Citizens' Climate Lobby.
Editorial on 07/03/2015