To fully and equitably address climate change, California will need to invest an estimated $12-20 billion per year, far cheaper than the cost of business as usual. These investments will require innovative funding strategies to ensure enormous job, health, environmental, and community benefits. This can pay for an urgently needed suite of bold policies for a climate-safe California.
Urge your California legislators to support a climate bond here.
An initial $10 billion (at minimum) economic stimulus bond measure can help secure a healthy, equitable, and climate-safe recovery. California investments must:
- Prioritize the needs of those most impacted by fossil fuel pollution, the pandemic, and climate change, particularly in Latinx, Black, Asian and Pacific Islander, and Indigenous communities
- Electrify all buildings and transportation, and invest in clean and affordable transportation
- Require robust engagement of lower-income communities, and ensure access to programs and funding for improved public health outcomes, environmental benefits, and economic opportunities
- Oppose regulatory rollbacks and delays that weaken protections, and support toxic site cleanup in communities already at the frontline of gas and oil pollution
A properly funded climate bond can have a profound impact on our ability to move toward a green, clean, and just future. It can launch the equitable phase-out of fossil fuels as well as programs for carbon sequestration, clean air and water, healthcare, and sustainable housing. A strong climate bond can also begin to fund the just transition of workers currently dependent on fossil fuel industries.
A top priority for The Climate Center is working with economists and policy experts to develop potential pathways for securing the funding needed, such as:
Frequent flyer fees
New climate action financing mechanisms must be added to the mix of available options by 2025 to generate upwards of $20 billion annually for implementing these urgently needed climate policies. These include establishing and implementing a frequent flyer fee per passenger from all California airports by 2025. Initial calculations show that there were 240 million passengers at California’s top 8 airports in 2018. If each were charged a $10 “Climate-Safe California” fee, the state could raise $2.4 billion annually to invest in reversing the climate crisis.
A green bond, also called a climate bond, is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects. These bonds are typically asset-linked and backed by the issuing entity’s balance sheet, so they usually carry the same credit rating as their issuers’ other debt obligations. Green bonds encourage sustainability and to support climate-related or other types of special environmental projects. More specifically, green bonds finance projects in energy efficiency, pollution prevention, sustainable agriculture, fishery and forestry, the aquatic and terrestrial ecosystem protections, clean transportation, clean water, and sustainable water management. They also finance clean technologies climate change mitigation.
Green bonds typically come with tax incentives to enhance their attractiveness to investors. The World Bank issued the first official green bond in 2009 and around $157 billion worth of green bonds were issued in 2019.
In 2019, California authorized the establishment of Public Banks. The new law authorized “public ownership of public banks for the purpose of achieving cost savings, strengthening local economies, supporting community economic development, and addressing infrastructure and housing needs for localities.” Establishing public banks to invest in climate actions that reduce costs can help to reduce emissions. Energy efficiency upgrades are one of the key ways that public banks can do this, while also enhancing community resilience in the face of worsening climate impacts such as heatwaves.
Related: Public Banks: Potential to Reduce Cost and Eliminate Silos of Financing for Clean Energy and Just Transition by Sylvia Chi, Asian Pacific Environmental Network and Isaac Sevier, Energy Efficiency for All
Price on Carbon
For several years, The Climate Center has been advocating for a carbon price that returns revenues to people. The California Climate Credit is one of the first times that this has been put into practice.
A Carbon Fee and Dividend approach would collect money from fossil fuel emitters per metric ton of carbon dioxide emitted. This fee would increase each year, exposing the true cost of carbon over time. These funds would then be given directly to households as a monthly dividend. By imposing this fee, the US could reduce CO2 emissions to approximately 50% below 1990 levels in 20 years while decreasing the death rate from pollution, adding more jobs, and creating an economy that prioritizes a carbon emissions-free country.
For our nuclear power policy click here.
Current Legislation for a National Price on Carbon
HR 763: Energy Innovation and Carbon Dividend Act of 2019
The Energy Innovation and Carbon Dividend Act of 2019 is a bill in the United States House of Representatives that proposes a fee on carbon at the point of extraction to encourage market-driven innovation of clean energy technologies to reduce greenhouse gas emissions. The Climate Center supports this bill.
Click here to read an assessment of this bill by Dr. Noah Kaufman, John Larsen, Peter Marsters, Hannah Kolus and Shashank Mohan of Columbia University.
Related: How to Cut U.S. Carbon Pollution by Nearly 40 Percent in 10 Years by Robinson Meyer, The Atlantic, November 13, 2019
Why do we need a price on carbon?
Why do we need a price on carbon? To reflect the actual cost to our economy and environment of fossil fuel. When we have to pay more to pollute the atmosphere for our energy needs, we will consume less fossil fuel-based energy and more renewable energy. We can do this by “capping” the greenhouse gases that are allowed to be put into the atmosphere and making polluters pay when they emit emissions under this cap.
At the same time we need a policy that addresses the regressive impact of rising energy prices on middle and lower-income people that such a carbon price will contribute to. That is why we believe a substantial portion of any revenue collected by the state from a carbon tax or fee should be returned to citizens in the form of a dividend, rebate, or credit. This is sometimes referred to as “Cap and Dividend.” The good news is that in California, in part because of our efforts, we now have both.
Why are climate dividends/credits so important?
Pollution is not free. It creates health problems, harms the environment. Making companies pay for their pollution captures some of those costs, which can be returned back to all of us through dividends. The dividend converts the carbon pollution going into the atmosphere into money going into your pocket. With dividends, you can come out ahead by taking action to reduce your impact and your costs. The amount of your dividend will stay the same, even if you reduce your energy use.
Companies that generate energy pay into a fund that compensates everyone for the pollution emitted into the sky we all share.
How does The Climate Center promote climate dividends?
The Climate Center has focused on getting a price on carbon that reflects the actual cost of fossil fuel to our economy and environment and includes climate dividends. Since 2007 we have been educating policymakers, stakeholders and the public with the aim of including climate dividends in California’s implementation of AB32, the Global Warming Solutions Act.
We have attended dozens of hearings, submitted comments, and organized events to educate policymakers about climate dividends.
The CPUC’s adoption of the first climate dividend came about because policymakers were educated. We weren’t the only ones there, but we were an important part of that. We had other victories along the way leading up to this.
A State-appointed panel of experts, called the Economic and Allocation Advisory Committee (EAAC), studied the best strategy to allocate the revenue raised by the cap & trade program. The EAAC’s January 10th, 2010 report recommended that the largest share – roughly 75% of allowance value – should be returned to California households. According to EAAC figures, this dividend translates to $388 in 2012 for a family of four, rising to $1,036 by 2020, adding a total of $7,004 to family incomes over the 8 year period. The Climate Center continues to reach out to lawmakers to incorporate this recommendation into future legislation. If we are successful, it will be a huge victory for California’s economy and the environment.