A new study examines public opinion in the (very few) countries where a carbon "fee & dividend" has been implemented. Getting money back does not seem to change voters' opinions about taxes much.
As a long time supporter of citizens climate lobby's Energy Innovation and Carbon Dividend Act,( EICDA) HR 2307, with over 80 endorsers in the US House, I found this Volts article very disheartening. I am not ready to give up on the notion that the average person will deny the advantage of having big fossil fuel giants pay a fee for continuing to poison our atmosphere, and that with careful, simple explanation they would welcome a dividend from those fees that are returned in equal installments to each US citizen. Indeed, most households in the US would benefit directly from EICDA, lifting many out of poverty. The challenge is in the messaging. We at CCL will soldier on.
Perhaps the researchers are asking the wrong question. Rather than asking whether refunds increase the popularity of carbon taxes, why not ask do carbon taxes work; that is, is there evidence that the tax reduces carbon emissions? That's what matters ultimately.
Thanks for this look at the carbon tax/fee and dividend programs implemented in Switzerland and Canadian provinces, David.
A couple of thoughts, for starters:
* Isn't one plausible takeaway that both places implemented such plans, and they didn't become wildly unpopular? Very broadly speaking, approval remained flat? And to some significant degree, they were invisible to many people, buried amidst the myriad details of government programs that most of us put on the back burner, unless they're directly relevant to our current life contexts.
* If so, the price of emitting carbon has been successfully priced upwards. And presumably over time, decisions by consumers and businesses will reflect that, in favoring energy efficiency improvements, changes in behaviors, and shifts to non-carbon-emitting energy production sources?
Am not sure what support you found for the conclusion that "the amounts of money generally being discussed in carbon refund policies are not large enough to be life-changing for voters"? Even when this is "at the margins," there's a potential for incremental improvement? Is it that the current taxes/fees in one or both places aren't sufficient to perceptibly raise the cost of carbon (and by implication, overall GHG) emissions? Or?
* About the vote in Switzerland not to raise the tax level, IIRC, one of the features of several of the plans promoted by various "conservative climate change" groups, including those you mentioned, is to have that level gradually rise over time?
* Regarding perceptions where "many people will think they are not being made whole," what aspects of carbon fee and dividend plans could substantially or largely obviate that? One possibility is, perhaps akin to UBI, to structure dividends in ways that are simple, straightforward, and as nearly "flat" as possible?
Scott Santens, in his UBI-focused take on fee and dividend plans, https://medium.com/basic-income/this-idea-can-literally-change-our-world-107cbc94057a, citing a paper by Anders Fremstad and Mark Paul, appears to suggest that a flat, per-capita dividend, and one which simply returns all of the fees collected, save for modest administrative costs, is inherently progressive, not regressive. "What it comes down to is who has the larger carbon footprint, and the answer is those with the most money. Estimates show that on average, those in the top 30% of earners will pay more due to the carbon tax than they receive in the flat rebate, and the bottom 70% will receive more in the flat rebate than they pay in higher costs. That’s a highly progressive outcome that is not achieved by just reducing other taxes."
As well, that makes it far harder for propagandists to "spin" such a program as unfair and thus put it in a negative light, if every participant is receiving identical dividend amounts? (Am thinking of the Alaska Permanent Fund as another such example of a widely popular, per-capita dividend – outside of recent fluctuations based on its funding source.)
Let me try to be an optimist here. Maybe nobody is all that excited about getting their carbon rebates. But just wait until somebody tries to take them away!
It turns out people by and large don't do "careful economic cost-benefit analysis". Who could have predicted?
I think a major cause of the problem is that people have been conditioned not to trust government. You could explain how carbon rebates will benefit them until you turn blue, and they still wouldn't believe you. They think crime went up, when it actually went down. They think Obama raised taxes, when he lowered them. It's almost like there's a "pessimism bias" that transcends facts and logic.
While more prevalent on the Right, this "government lies" attitude isn't limited to conservatives. Republicans have spent the last 40+ years destroying trust in our institutions, and honestly I don't know what you could do to reverse it.
It's particularly tough when it comes to the climate. "We're instituting huge new interventions in life-as-usual, so we can make the future *less bad*" is a difficult sale to make. We're constantly told we need to emphasize how climate action will *improve* our lives, but I don't see much effort in that direction.
Lots of solid good sense here. Thanks for writing this.
Thanks for raising the question of whether "dividends" actually build support for carbon pricing. Alas, the "untold money and effort" you mention has overwhelmingly been expended to advocate hide-the-price gimmicks like "cap & trade with offsets" and proposals like "fee & dividend" that obscure the purpose -- to make climate polluters pay.
New public opinion research (Maestre-Andrés, S., Drews, S., Savin, I. et al. "Carbon tax acceptability with information provision and mixed revenue uses," Nature Communications, Dec 2021), suggests that carbon taxes gain public acceptance when information is provided about their effectiveness and revenue is spent on climate projects. https://www.nature.com/articles/s41467-021-27380-8
These findings strike me as encouraging: People support taxing climate polluters when they understand how that reduces emissions and when the revenue enhances those climate benefits. And I take heart from the growing support of climate hawk Senators: Whitehouse, Schatz, Wyden, Durbin and Heinrich who suggest folding a carbon tax into the Build Back Better Bill.
you know what is popular? it's not dividends, it's solar subsidies and net metering.
You know what california democrat country club policy makers hate? that solar has become affordable that lower and lower middle income people are installing solar in ever growing numbers. Solar is supposed to be exclusively a class signal of status and wealth, and if the smelly plebs that drive their cars (Parasite reference) are installing solar, then california democrat country club policy makers are determined to stop those poors and put them in their place and make sure they can't get any benefit from it, because what good is a class status and wealth signal if that signal is not artificially scarce.
The devious genius of the democrat country club policy makers is that they get Berkeley experts to oil-wash their anti-solar policies by saying they're doing it FOR the smelly poors they hate. (Get it? It's the opposite of green-washing.)
It's really brilliant, Solar has become affordable to the poors, the california democrat country club policy response is to make Solar unaffordable for the poors while saying doing so is to "HELP" the poors. The desired outcome is to reduce solar installation by the poors and it's done by making solar more expensive.
DEMOCRATS! A successful and popular policy has to be killed because democrats hate success and popularity, no wonder they lose elections in places that aren't California.
Ah, David Roberts, I have appreciated reading your expertise on the ins and outs of energy and climate policy here at Volts as well as at Vox, but apparently your bias against carbon taxes continues to know no bounds.....
I realize that you are a writer/journalist, and so you make a living by writing and getting paid subscribers, and most writers/journalists accomplish that by attracting the attention of readers, often with 'controversy.' Up until now I have read your articles for free, and so kudos to you for getting me to actually pay in order to be able to comment on this article. Touche. You win. :)
- Firstly, your article title totally overstates the narrower conclusions of the actual Mildenberger et al. research study, more appropriately entitled "Limited impacts of carbon tax rebate programmes on public support for carbon pricing."
- The historical programmes of Canada and Switzerland provided rebates to citizens, but to state that the study sample is in "places where carbon fee-and-dividend policies have been implemented," that's a pretty big stretch IMO. As you correctly point out, the rebates in Switzerland are a discount "on your health insurance premiums," and "in Canada, it's a line on your tax return." Not too salient and attention-grabbing. Dividends, as defined by the framework as well as legislation endorsed by Citizens' Climate Lobby and Climate Leadership Council, are regularly delivered (i.e. monthly, quarterly) direct (cash) rebates mailed to or electronically deposited to citizen households. In fact, again as you point out, Canada is in the process of switching to monthly delivery of dividend checks to households. They've learned a thing or two....
- Also, as other commenters have observed, the finding that the level of support/approval remained flat over the short time period (a longitudinal time-period of 14 months might not be long enough to be able to detect changes in approval/popularity, especially in Canada, because how many times would they have actually seen their line item rebates on their tax returns? ) and that the polices did not become unpopular is very supportive for implementing carbon fee and dividend, especially along with the measured reductions in emissions covered by the taxes. A policy that reduces emissions and is durable is preferable to policies or actions that are prone to reversals by opposing political parties.
- Lastly, Charles Komanoff wrote a more sophisticated, better articulated reply to your article than me that I think is worth sharing, and I share it here for everyone's education Since climate progress is stalled, let’s unload on fee-and-dividend (carbontax.org)
For a well-read journalist, I wish you would allow yourself to get wonkier and into the weeds of actual carbon fee-and-dividend bills proposed in Congress, as opposed to remaining at a comfortable 30,000 foot level from which to drop overly general criticisms of carbon taxes. I sincerely think you would actually find many aspects in the fine print as real solutions designed to address many of the criticisms that you bring up.
David, thank you for this post and for drawing our attention to this paper. I did not read it as being as negative for carbon fee and dividend policies as you seem to be implying. I see their survey data as being neutral overall, which to me is ok given that taxes can be intrinsically difficult. It means these have been implemented successfully in Canada and Switzerland. The point that survey respondents hadn't noticed the details and that their opinions are determined by partisanship, implies that carbon pricing has overall not been experienced as burdensome by households. The authors in their policy messages suggest looking at how to improve the message to make the dividends more popular.
I looked to see how emissions have tracked in Switzerland - it seems like there has been substantial reduction since 2008 when pricing was initiated: https://ourworldindata.org/co2/country/switzerland?country=~CHE
From eyeballing the chart, it looks approximately like 37% reduction in per capita emissions, and the rate of reductions seem steeper post 2008 than pre 2008, and has been steeper than the US over that same period (27% from this chart).
I know ex-post attribution is hard, without knowing all the details about other policies implemented. But isn't this evidence supportive of exactly the scenario that carbon fee and dividend proponents describe: carbon pricing will help emissions reduction and work quietly through the economy, while carbon dividends will help ensure political stability of that policy?
The promise of a Carbon Fee & Dividend suggests that polluters will be fined (taxed) and that fine will be passed along to US citizens in the form of a monthly dividend. As time goes on the fine will increase as a motivation for the polluters to stop polluting. However the increasing fine will represent an increasing dividend for US citizens.
As the dividends continue to increase the citizens will enjoy an increasing income flow that unfortunately is tied to pollution. Just like all good investors, the citizens will want to continue to receive an increasing dividend. So the public who now directly benefits financially from pollution will be encouraged to continue to support pollution and continue receiving greater monthly dividends.
The costs caused by the pollution isn’t as personal as the monthly check, so the connection to pollution gets lost from the public consciousness. Along with this, the motivation to reduce pollution becomes unrelated to the monthly check from the government. And by default we could have motivated the average citizen to become deniers of pollution and climate change by buying their allegiance with a monthly check.
We don’t want to repeat the “Cobra Effect”
The term cobra effect originated in an anecdote that describes an occurrence in the time of British rule of colonial India. The British government was concerned about the number of venomous cobras in Delhi. The government therefore offered a bounty for every dead cobra. Initially this was a successful strategy as large numbers of snakes were killed for the reward. Eventually, however, enterprising people began to breed cobras for the income.
The income from a carbon tax could instead be made available as credits for making renewable energy commitments. Use the credit to participate in a Community Choice 100% program, buy an EV (new or used), electrify home appliances, add solar and a battery backup to your home that could help utilities manage fluctuations in demand.
The benefits of a Carbon Tax needs to have a direct correlation to reducing pollution in the eyes of the citizens. A monthly automatic Dividend check does not accomplish that objective.
We can use the Carbon Tax dividends as an incentive for individuals to reduce their individual carbon footprint. But without an environmental connection we risk having it become a blind entitlement.
Thanks for an interesting article. For sometime I have thought that the funds from a carbon tax should primarily cover the costs of damage due to climate change rather than a dividend. I would include the fight and clean up due to fires in the west, damage from hurricanes and tornados in the south and mid west, loss of property on the cost line, etc. This idea has the feature that if your life style requires lots of carbon, you should financially cover the cost of the consequences.
This article throws water on this idea. If people cannot see an advantage to a dividend, then to expert a positive response to a willingness to help others who have suffered from climate change is expecting way too much (too socialist I presume).
Can we assume that an eventual reduction trend in fossil fuel use is going to tigger inflationary increases in fossil fuel cost/ services to consumers from producers & suppliers? Like utility companies imposing fees on solar homes to compensate for less utility company power being consumed = fewer customers paying “full price” for grid connection/ reliability. Waiting to see how this plays out politically in CA right now. In time, could “inverted tax” effects like this become a much bigger negative perception political issue for consumers than a nominal carbon tax? Any ideas about a time-line on this…….2030……2040?