Column: Going green: Fossil-fuel fees would pay back via Carbon Cashback

It would stimulate the economy by putting money into the pockets of Hawaii’s residents. The money would be raised from a fee on fossil fuels that would have the effect of reducing their consumption. That would benefit the environment. It’s not a dream or fantasy. It’s a program called “Carbon Cashback.”

Although Hawaii adopted goals for reducing fossil fuel consumption, actual consumption remained the same for years until COVID-19 hit. As the economy recovers, everyone should be discouraged from using fossil fuels in a thoughtful, predictable manner, with the least financial harm to people.

Carbon Cashback would assess a fee on fossil fuels, and the revenue from the fee would be returned as a dividend to Hawaii’s residents, similar to the way in which corporations distribute profits to their shareholders. With Carbon Cashback, each Hawaii resident would receive a share of the money. As residents spend their money, the economy would be stimulated.

More than 3,500 U.S. economists, including 28 Nobel Laureate economists and four former chairs of the Federal Reserve, have signed a statement supporting the carbon fee and dividend program. (It’s called a “carbon” fee because the burning of fossil fuels releases greenhouse gases that have carbon in their molecules.)

But Carbon Cashback is not just economic theory, as 42 nations or sub-jurisdictions have already adopted it in some form. That number is growing because it is effective, and it works in conjunction with other programs that rein in climate change.

Carbon Cashback would take the revenue from a fee on fossil fuels and put it into a trust fund. The beneficiaries would be Hawaii’s residents. Other carbon fee legislation funds government programs, but Carbon Cashback distributes ALL the revenue from the carbon fee to residents. Each adult would be entitled to one share, and each dependent would be entitled to half a share.

Dividends from the trust fund would be distributed in the form of checks. When people spend their dividends, it will help stimulate the economy.

The carbon fee would be assessed on distributors of fossil fuels, who are expected to pass on most of the cost to consumers as higher prices. The higher prices would discourage people from using fossil fuels.

Fossil fuel prices are artificially low because the fossil fuel industry receives more than $600 billion annually in subsidies that bring down prices. Renewable energy also receives subsidies, but not nearly as much as fossil fuels. The carbon fee would help to level the playing field to make renewable energy more competitive with fossil fuels.

Most people would benefit financially from Carbon Cashback based on spending patterns among income groups. For most people, their dividend would be larger than the increase in their spending due to the carbon fee. Those in the lowest income category would benefit the most because of their low use of fossil fuel. Those who carpool or take the bus would likely retain most of their dividend.

We must all change our habits to reduce our consumption of fossil fuels, and Carbon Cashback nudges us in the right direction. If we continue to use fossil fuels at the existing high rate, it won’t be long before the effects of climate change become catastrophic. We would be robbing future generations of a hospitable environment.

Carbon Cashback would substantially reduce the burning of fossil fuels, while at the same time minimizing adverse financial effects on people. In fact, the majority would benefit financially. If you like the idea of Carbon Cashback, tell your state senator and representative.

Matt Geyer chairs the Environmental Justice Task Force of Faith Action for Community Equity; Nancy Young and John Kawamoto are task force members.