Carbon Pricing

CCS Designs a Washington, DC Carbon Fee and Rebate System to Create Local Jobs

July, 2017. The Center for Climate Strategies (CCS) completed macroeconomic design and analysis of a proposed carbon fee-and-rebate system that would put a carbon-based price on all greenhouse gas emissions in Washington, DC.  Supporting an initiative by the Chesapeake Climate Action Network with numerous government and non-governmental organizations, CCS used its expertise in designing and testing macroeconomic impacts of carbon pricing to develop a policy design that could preserve the economy and enhance employment while driving a 20%+ reduction in greenhouse gas emissions.

After design testing and modeling over a dozen variations on this policy design, the final scenario involved a price of $20 per ton, rising $10 a year, with all money collected is to be returned immediately – 75 percent as cash dividends to households (with additional support to burdened low-income households), 5 percent to small business as an operating-cost offset, and 20 percent invested in green infrastructure.  This scenario achieved emissions reductions, progressive impact on DC households, minimum pressure on local businesses to move out of the District, and significant new green investment. 

This work shows that win-win policy design collaboration processes – those that benefit the environment and the economy – can be developed at all levels of government.  It also adds to a wave of state and local initiatives, and a growing interest by Congress and national organizations, focused on price-based approaches to climate change that allow the market to identify efficient pathways to compliance while stimulating the economy through quick and strategic return of all revenue.  CCS supported a working group of governmental and nongovernmental representatives convened by the Chesapeake Climate Action Network to design a system that would cut greenhouse gas reductions 20 percent from 2032 projected levels while expanding the city economy by 500 net new jobs – all while providing a progressive income benefit to lower income households. 

Read the report at Carbon Fee-and-Rebate Policy in Washington, D.C.