Fix the climate and get free money

Most of the time, I use this blog to tell you about two kinds of things:

1. Ways to save money that are also good for the environment, and
2. Ways to help the environment without spending more money.

This week's topic is sort of in between the two. It's something you can do to help the environment that doesn't cost you any money right now, and that could help put a little more money in your pocket in the long run. The only catch is, it requires cooperation from Congress, which isn't easy to get these days. But that's where you come in.

The item in question is the Energy Innovation and Carbon Dividend Act, currently before the House as H.R. 763. Its supporters are billing it as a "bipartisan climate solution," but that's a bit of an exaggeration; to date, it has exactly one Republican cosponsor (Francis Rooney of Florida), along with 74 Democrats. Which is a pity, because in theory, it's the kind of market-based solution Republicans are supposed to love.

See, one of the big problems with greenhouse gas pollution is that the people doing most of the polluting aren't the ones paying the biggest price in terms of climate change. That burden is falling largely on developing countries, where homes are threatened by sea level rise, crops are threatened by unstable weather patterns, and lives are threatened by severe storms. The problem is, so long as fossil fuels remain cheap to produce and use, folks in developed countries have no incentive (or at least, not enough incentive) to switch to more sustainable forms of energy.

The easiest way to provide this incentive is to simply make fossil fuels more expensive. Add a fee based on the amount of carbon they contain, charged right at the source (the coal mine, oil refinery, or gas pipeline). This immediately makes fossil fuels less profitable for producers — and if they try to compensate by charging more for them, it makes them more expensive for consumers, who will respond by consuming less of them. In short, you bring the market price in line with the actual amount of social harm, and let Adam Smith's invisible hand take care of the rest.

Now, of course, this has a catch for consumers: It makes it more expensive to heat your home or put gas in your car. And while that gives you an incentive to drive less or turn down the thermostat, there's only so much of that you can do. So if this bill were simply a tax on carbon, it would put a burden on all consumers, and especially on the working class, who spend more of their income on fuel than others.

However, that's where the dividend part comes in. Because the beauty of this bill is that all the money collected in carbon fees goes directly to American households as a monthly dividend. And this dividend is exactly equal for every household, rich and poor. And while poor people spend a larger share of their income on fuel, still use less of it in absolute terms than rich people — which means that they will, on average, come out ahead. And since middle-class Americans can to some extent control how much they spend on fossil fuels, they can pretty easily game this system so that they also collect more than they pay out

In fact, according to the creators of the bill, the "average" American will come out ahead as a result of this bill, to the tune of an extra $500 per year. This, in turn, will allegedly stimulate the economy, creating as many as 2.1 million new jobs. Now, this is probably an overly optimistic estimate, but it's not unrealistic to say that the average American family will end up with more money in their pocket as a result of the dividend. Canada already has a system much like this one, adopted in 2018, and the government estimates that in its first year, the average Canadian household would pay between $244 and $403 extra for fuel — and collect between $300 and $598 in dividends. And this cash bonus will only grow as the carbon fee rises over time.

If you'd like to see how just how the carbon dividend would affect you financially, there's a section on the bill's website where you can do that. Just answer a few questions about your lifestyle (household size, home and car type, average monthly energy bills), and it gives you a back-of-the envelope estimate of how much you would pay in increased energy costs and how much you would get back in dividends. I put in the numbers for me and Brian, and it estimated that we would pay an extra $29 per month in fuel costs, but would get back $34 per month from the dividend, for a net gain of $5. It's not much, but we certainly wouldn't be any worse off — and if it helps keep New Jersey from sinking into the ocean, that would definitely be a big benefit for us.

So what can you do to help make this happen? Well, first of all, you can write to your senators and representative urging them to support the bill. There are sample letters on the website of the Climate Change Lobby (CCL). This will be particularly helpful if any of your legislators happen to be Republicans, since we're going to need a lot more of them on board to get this thing through Congress. You can also, if you are so inclined, sign up for the CCL's mailing list to learn about future actions that can help, or even join a local chapter of the CCL to participate in more focused campaigns of calling, lobbying, and writing op-eds.

Also, if you happen to be the head of an organization or another "prominent individual" (the CCL counts anyone who owns a business, even a small one, as a prominent individual), you can publicly endorse the bill and spread the word about it to all your followers on social media. (Heck, even if you're not a prominent individual, you can do that — it's basically what I'm doing right now.)

Basically, just keep pestering the heck out of all your legislators, and spreading the word about the bill and the benefits of carbon pricing to everyone else you know. It's the kind of climate legislation even a climate skeptic can love, because hey, who's going to say no to free money?