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How to
spend the money? Summary of workshop held June 22, 2007, in Oakland, California. Background As California implements the Global Warming Solutions Act (AB32), the state may annually collect billions of dollars from carbon emitters. How that money should be used is thus an important part of the discussion about climate policy. To stimulate deeper discussion of this question, several California NGOs co-sponsored a workshop on June 22, 2007. Sponsors of the workshop were the Climate Protection Campaign, Ella Baker Center, Redefining Progress, Union of Concerned Scientists, California Tax Reform Association, the Tomales Bay Institute and TURN. The Association of Bay Area Governments hosted the workshop. About 20 representatives of environmental and justice groups took part (see participant list at bottom). The workshop intentionally did not focus on the mechanics of revenue raising. Instead, it focused on how the revenue could be used. The starting assumptions were: (1) In the future, all carbon polluters should pay; (2) the revenue belongs in some way to all Californians; and (3) it should be used for the common good, by which is meant widely shared ecological and economic benefits. Potential revenue estimates The workshop began with an estimate of the potential revenue stream, which could range from $2 billion a year (if allowances are priced at $5/ton) to $8 billion (if priced at $20/ton) or more if the price goes higher. One of the main factors affecting the size of the revenue stream would be the amount of carbon 'offsets' allowed by the state. The more offsets, the less revenue. Recycling revenue to people It was broadly agreed that, in order to mitigate the regressive economic impact of higher fuel prices, a substantial portion of the carbon revenue should be returned to households. There were several suggestions on how to do this: o Per capita dividends. This is the model Alaska uses to distribute income derived from oil leases and royalties. Though everyone receives the same amount, the overall distributional effect is progressive (that is, low-income households benefit disproportionately). If applied to carbon revenue, the universality of the dividends would sustain long-term political support for emission reductions, even as fuel prices rise. The dividends could be paid by check, debit card, electronic funds transfer or 'shares' that can be redeemed at banks. The 'story' behind the dividends is that, because the atmosphere belongs to everyone, everyone deserves an equal share of the income. o Earmarked dividends. In this model, individuals would receive equal rebates but could only spend them on things like transit, weatherization and purchase of energy efficient appliances. o Targeted tax credits. The federal Earned Income Tax Credit is targeted to low-income households with wage income; it has been called "the best anti-poverty program in the country." At present, there is no equivalent tax credit for California. Carbon revenue could be used to create one. o Community organizations. It was also suggested that carbon income could be recycled to community organizations, which could use it for 'green collar' job training and providing pathways out of poverty. Public investments Among numerous public investments that could be made with carbon revenue, there was discussion of mass transit, weatherization, clean technology R&D, carbon sequestration, levees and incentives for renewable energy. It was noted that spending carbon money on public investments could create tens of thousands of jobs, depending on how it is spent. Questions raised The workshop raised many questions, including: o Given that revenue from carbon charges is insufficient to meet the many needs discussed, what other potential revenue sources (state, federal and private) are there? And what is the best pairing of sources and uses? o Why should unearmarked money be given to people to spend as they wish? Why should rich people receive any amount of carbon revenue? o Who should decide how carbon revenues are spent? The Air Resources Board? The legislature? Next steps o Join the "auction caucus" that is continuing to discuss these questions. Contact Mike Sandler (mike (at) climateprotectioncampaign.org). o Expand the dialog with the Environmental Justice community. Contact Rafael Aguilera (rafael (at) theverdegroup.org). o Contact other groups: unions, seniors, women, etc. o Hold another workshop in LA or Sacramento. Attendees (name and affiliation) Rafael Aguilera Global
Green
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Carbon
Share works alongside the Climate
Protection Campaign.
For more information, contact Mike Sandler (707) 529-4620 or email mike [at] carbonshare.org. |