A Climate Solution: Cap and Dividend

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Cap and dividend is a simple, fair, and built-to-last policy solution that will reduce the carbon and other heat-trapping emissions now harming our climate while boosting the income of most American families. It caps fossil fuels, requires energy companies to purchase pollution permits at auction, and returns all the auction revenue in equal amounts to every U.S. resident with a valid Social Security number.

Why cap and dividend will work

Cap and dividend is a simple and fair means of reducing carbon emissions.

The Cap: Big polluters bid on a limited number of permits to purchase fuel that will cause CO2 emissions.  For example, the amount of coal a coal company could sell to utilities would be purchased annually, and that amount would decrease as earth’s atmosphere approached science-based carbon cap targets.

The Dividend: 100% of the money raised from these auctions is returned directly to taxpayers. Each citizen would receive an equal quarterly refund – a “dividend” – to cover likely price increases in utility and gas expenses. With an initial auction price of $10/ton of CO2, a median family of four would receive a net benefit of about $260 per year. All lower and middle-income Americans will see a net increase in their annual income. And those who use less fossil fuel energy will benefit even more, further incentivizing a decreased reliance on dirty energy.

Why it will last

Cap and dividend is a sustainable long-term strategy for reducing CO2 emissions, because taxpayers are highly likely to support a policy that will help them cope with higher energy prices during the economy’s transition to clean, renewable energy. Many consumer, environmental and social justice organizations support this approach because it is straightforward, effective and fair.

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