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US: California State Legislature to Consider Carbon Dividend

California State Senators have introduced a bill that would establish a carbon “cap-and-trade” system and distribute a large portion of the revenues as a dividend to all state residents, that is, as a type of basic income.

California State Senator Bob Wieckowski and Senate President Pro Tempore Kevin de León (both members of the Democratic Party) have introduced the proposed legislation SB 775, which would establish a floor and ceiling on the price of carbon in the state. The policy would go into effect in 2020, with the price floor and ceiling increasing incrementally each year.

Among US states, California has been ambitious in its efforts to reduce carbon emissions, passing a law in 2006 that established a goal of reducing emissions to 1990-levels by 2020. So far, however, the state has primarily relied on regulation of emissions levels as a way to meet its targets. Legislators like Wieckowski and de León believe that pricing regulations will be more effective at reaching longer-term goals in limiting carbon emissions.

One specific feature of SB 775, however, is relevant to those with an interest in basic income: the establishment of the California Climate Dividend Program, which would distribute a portion of the program’s revenue in the form of quarterly cash payments, distributed in equal amount to all residents of California on an individual basis. The dividend is, then, a form of basic income, although the amount of the dividend is not yet known and presumably would remain far below a livable income.

If SB 775 becomes law, the California Climate Dividend Program is likely receive the majority of the new state revenue (around 90 percent according to MIT Technology Review, and between 50 to 90 percent according to Vox). Other revenue would be directed towards public infrastructure, disadvantaged communities, and research and development in clean energy.  

The legislation would also establish a Climate Dividend Access Board, which would work with state tax officials to develop a mechanism for delivering the quarterly dividends to residents, and to “maximize the ease with which residents of the state may enroll in the program.”

Environmental advocates often endorse per capita dividends in conjunction with taxes or fees on carbon as a way to offset the cost to consumers of higher energy prices. In the words of SB 775, the dividend is introduced “for the public purpose of mitigating the costs of transitioning to a low-carbon economy.” Carbon dividends have gained cross-party support in the United States, with a group of prominent Republicans issuing a proposal for a carbon tax and dividend earlier in the year. Correspondingly, many American basic income supporters see a carbon dividend as a practically and politically feasible way to introduce a small basic income in the country.

To become law, SB 775 needs to pass both houses of California’s legislature with a two-thirds majority.

 

References

SB-775 California Global Warming Solutions Act of 2006: market-based compliance mechanisms,” California Legislative Information, May 1, 2017.

James Temple, “California Proposes Ambitious New Cap-and-Trade Program,” MIT Technology Review, May 1, 2017.

David Roberts, “California is about to revolutionize climate policy … again,” Vox, May 3, 2017.


Reviewed by Russell Ingram

Photo: CC BY-NC-ND 2.0 Kim Seng

Kate McFarland

About Kate McFarland

Kate McFarland has written 426 articles.

Kate has previously worked as a professional student, but is currently taking a mid-career retirement.

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