HomeMy WebLinkAbout03-15-2016 Item 13 - Support of the National Revenue-Neutral Carbon Free Dividend Act
Meeting Date: 3/15/2016
FROM: Derek Johnson, Assistant City Manager/Interim Finance and IT Director
Prepared By: Greg Hermann, Principal Analyst
SUBJECT: SUPPORT OF THE NATIONAL REVENUE-NEUTRAL CARBON FREE DIVIDEND
ACT
RECOMMENDATION
Consider a Resolution expressing the City’s support for the National Revenue-Neutral Carbon Fee and
Dividend Program.
DISCUSSION
It is well documented that greenhouse gas emissions from human activities, such as the burning of fossil
fuels, are the key contributor to the current rise in global temperatures. Research from the National
Academy of Sciences indicates that a reduction in the concentration of greenhouse gases in the
atmosphere, from the current 400 parts per million to 350 parts per million, is needed to avoid future
disruptive environmental, health, agricultural, and economic harm.
A recent 2014 study by the non-partisan Regional Economic Models, Inc. found that a Revenue Neutral
Carbon Fee and Dividend Program would be the most successful in lowering CO2 emissions. If widely
implemented, this program would likely result in CO2 levels at or below 350 parts per million by 2050.
CO2 is the most common greenhouse gas.
This issue was discussed by community members during public comment at the March 1, 2016, City
Council meeting and the City Council directed staff to place the item on the agenda of the next meeting.
Passage of this Resolution would confirm the City of San Luis Obispo’s support for Citizen Climate
Lobby’s National Revenue-Neutral Carbon Fee and Dividend Act.
By approving the attached Resolution, the City of San Luis Obispo requests that the United States
Congress immediately enact legislation and the United States President sign into law a National Revenue
Neutral Carbon Fee and Dividend Program. Further, the attached Resolution would direct the Mayor to
send a letter no later than 30 days after passage of this Resolution by the San Luis Obispo City Council to
all Mayors and City Councils, County Boards of Supervisors, School Boards, and State and Federal
legislators in San Luis Obispo, Monterey and Santa Barbara Counties, the Governor of California, and the
San Luis Obispo Council of Governments urging support for a National Revenue Neutral Fee and
Dividend Act and urging them to adopt a resolution in Favor of National Revenue-Neutral National
Carbon Fee and Dividend Legislation.
FISCAL IMPACT
There are no direct fiscal impacts associated with this action.
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ALTERNATIVES
The Council may choose not to support the Resolution or make modifications. If changes are desired, the
Council should specify the items that require revision.
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RESOLUTION NO. XXXX (2016 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, REGARDING THE NATIONAL REVENUE-
NEUTRAL CARBON FEE AND DIVIDEND PROGRAM
WHEREAS, having determined that the Carbon Fee and Dividend legislative principles
proposed by the non-partisan Citizens Climate Lobby, attached hereto as Exhibit A, would
provide an efficient approach to shifting the incentives that keep the United States reliant on
fossil fuel energy and would, thereby, help support the rapid deployment of cleaner energy
alternatives; and
WHEREAS, having determined that this approach would be fair to everyone and would
protect middle and low income households by providing them with a dividend (also known as a
rebate) that, on average, would be higher than the increased costs for energy for two-thirds of all
households (specifically the lowest income two-thirds) during the transition to cleaner energy;
and
WHEREAS, per the non-partisan study by Regional Economic Models, Inc. (REMI),
this approach would ensure a substantial increase in private investment in cleaner energy options
because they will become significantly less expensive relative to fossil fuels within a known time
frame; and
WHEREAS, this approach would encourage consumers and businesses to keep their
carbon footprint smaller while still ensuring that all households would be able to afford the
energy they need during the transition to cleaner energy; and
WHEREAS, the City wishes to respond to these challenges with a business minded
focus, and
WHEREAS, having determined that early adoption of the National Revenue Neutral
Carbon Fee and Dividend Legislation in the United States would grow our economy, add nearly
two million jobs, help make us a world leader in cleaner-energy technology, and help establish
the United States as a leader in future global climate negotiations; and
WHEREAS, the national revenue-neutral carbon fee and dividend has already garnered
widespread support from Republicans as well as Democrats as evidenced by recent op-eds and
public statements in 2015 by prominent political leaders.
BE IT RESOLVED by the City Council of the City of San Luis Obispo that the City
Council requests that the United States Congress immediately enact legislation and the United
States President sign into law a national revenue-neutral carbon fee and dividend program, as
provided for in Exhibit A, in order to protect the economy and the climate for future generations;
and
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Resolution No. _____ (2016 Series) Page 2
R ______
BE IT FURTHER RESOLVED that the City of San Luis Obispo directs the Mayor to
send a letter no later than 30 days after passage of this Resolution by the San Luis Obispo City
Council to all Mayors and City Councils, County Boards of Supervisors, School Boards, and
State and Federal legislators in San Luis Obispo, Monterey and Santa Barbara Counties, the
Governor of California, and the San Luis Obispo Council of Governments urging support for a
National Revenue Neutral Fee and Dividend Act and urging them to adopt a resolution in Favor
of National Revenue-Neutral National Carbon Fee and Dividend Legislation.
Upon motion of , seconded by , and on the
following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this 15th day of March, 2016.
____________________________________
Mayor Jan Marx
ATTEST:
____________________________________
Lee Price
Interim City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San
Luis Obispo, California, this ______ day of ______________, _________.
______________________________
Lee Price
Interim City Clerk
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APPENDIX A
To the Resolution in Favor of the
National Revenue-Neutral Carbon Fee and Dividend Legislation
Findings:
1. Causation: there is a consensus1, 2 among climate scientists, domestic and international
science bodies such as the National Academy of Sciences and the International Panel
on Climate Change and the World Meteorological Organization (IPCC, WMO), that
greenhouse gas emissions from human activities such as the burning of fossil fuels are
driving the current rise in global temperatures and climate change,3
2. Mitigation (Return to 350 ppm or below): the weight of scientific evidence also indicates
that a return from the current concentration of more than 400 parts per million (“ppm”) of
carbon dioxide (“CO2”) in the atmosphere to 350 ppm CO2 or less is necessary to slow
or stop the rise in global temperatures,4
3. Endangerment: further increases in global temperatures pose imminent and substantial
dangers to human health5, the natural environment6, the economy7, national security8,
and an unacceptable risk of medium and long-term future harm9,
a. Climate change caused by global warming-related greenhouse gas emissions
including CO2 already is leading to large-scale problems including increasing
acidity of oceans and rising sea levels; more frequent, extreme, and damaging
weather events such as heat waves, storms, heavy rainfall and flooding, and
droughts; more frequent and intense wildfires; disrupted ecosystems affecting
biodiversity and food production; and an increase in heat-related deaths10; and
b. We are approaching a dangerous threshold whereby, if it is crossed, humans will
no longer be able to influence the course of future global warming, as tropical
forests, peat bogs, permafrost and the oceans11 switch from absorbing carbon to
releasing it; and
4. Local effects on agriculture: the following effects of climate change are likely to occur if
we do not reduce our CO2 emissions to 350 ppm by 2050:
a. It’s predicted that by 2100 in the Modesto region the summer maximum average
will likely rise to 99°F from the current 91°F12 if we do not decrease current
emissions.
b. Given increased heat waves, droughts and higher temperatures13,14, California
farmers will face an increasingly uncertain future, where current crops may fail
and water may be even more scarce,15, 16, 17
c. If heat-trapping emissions continue to rise at today’s levels the snowpack in the
Sierra Nevada is likely to decline as much as 40% from historical levels by 2050
and as much as 90% by 2100, thus severely reducing the availability of water in
summer. However if we make significant emissions reductions the decline by
2050 could be as little as 12%.18
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d. Two thirds of California’s 2,400 endemic plants could lose more than 80% of their
current ranges if climate change worsens,19
e. The number of chilling hours at the end of this century is expected to be half or
less than during the 20th century such that many currently lucrative crops will no
longer be commercially viable in large areas of California,20, 21, 22
f. We can expect a range expansion and rapid increase in populations of insects
already present and the arrival of new insect pests to newly warmer regions amid
ecosystem changes thus negatively affecting agriculture and health,23, 24
5. Local effects on health: the following effects of climate change are likely to occur if we do
not reduce our CO2 emissions to 350 ppm by 2050 especially given that the San
Joaquin Valley air basin is one of the two most polluted air basins in the United States
that consistently violates the National Ambient Air Quality Standards (NAAQS)25:
a. Higher temperatures will likely lead to a doubling of peak ozone pollution
concentrations and an increase in small particle pollution at lower elevations
such as the San Joaquin Valley thus increasing asthma rates in children as well
as increases in chronic obstructive pulmonary disease, allergies, and pulmonary
disease.26, 27, 28, 29
b. By the end of the century, under both the IPCC’s medium (B1) and medium-high
(A2) scenarios, the number of extreme heat days during the summer months is
projected to at least double and in some areas increase by 500 percent. Impacts
will be largest in the inland parts of California30 including Modesto.
6. The present costs of fossil fuels are externalized: Presently the environmental, health,
and social costs of CO2 emissions are not included in prices paid for fossil fuels, but
rather these externalized costs are borne directly and indirectly by all Americans and
global citizens; and
7. Co-Benefits: the measures proposed in this legislation will benefit the economy, human
health, the environment, and national security, even without consideration of global
temperatures, by correcting market distortions, reducing in non-greenhouse-gas
pollutants, reducing the outflow of dollars to oil-producing countries and improving in the
energy security of the United States,31
8. Benefits of Carbon Fees: phased-in carbon fees on greenhouse gas emissions (1) are
the most efficient, transparent, and enforceable mechanism to drive an effective and fair
transition to a domestic-energy economy, (2) will stimulate investment in alternative-
energy technologies, and (3) give all businesses powerful incentives to increase their
energy-efficiency and reduce their carbon footprints in order to remain competitive,32
9. Equal Monthly Per-Person Dividends: monthly dividends (or “rebates”) from carbon fees
paid equally to every American household will stimulate the American economy and help
ensure that families and individuals can afford greenhouse gas-free energy,
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Therefore the National Revenue Fee and Dividend Act33 contain the following elements:
1. Collection of Carbon Fees/Carbon Fee Trust Fund: The Act would impose a carbon fee
on all fossil fuels and other greenhouse gases at the point where they first enter the
economy. The fee shall be collected by the Treasury Department. The fee on that date
shall be $15 per ton of CO2 equivalent emissions and result in equal charges for each
ton of CO2 equivalent emissions potential in each type of fuel or greenhouse gas. The
Department of Energy shall propose and promulgate regulations setting forth CO2
equivalent fees for other greenhouse gases including at a minimum methane34, nitrous
oxide, sulfur hexafluoride, hydrofluorocarbons (HFCs), perfluorocarbons, and nitrogen
trifluoride. The Treasury shall also collect the fees imposed upon the other greenhouse
gases. All fees are to be placed in the Carbon Fees Trust Fund and be rebated 100% to
American households as outlined below.
2. Emissions Reduction Targets: To align US emissions with the physical constraints
identified by the Intergovernmental Panel on Climate Change (IPCC) to avoid
irreversible climate change, the yearly increase in carbon fees including other
greenhouse gases, shall be at least $10 per ton of CO2 equivalent each year. Annually,
the Department of Energy shall determine whether an increase larger than $10 per ton
per year is needed to achieve program goals. Yearly price increases of at least $10 per
year shall continue until total U.S. CO2-equivalent emissions have been reduced to 10%
of U.S. CO2-equivalent emissions in 1990.
3. Equal Per-Person Monthly Dividend Payments: Equal monthly per-person dividend
payments shall be made to all American households (½ payment per child under 18
years old, with a limit of 2 children per family) each month. The total value of all monthly
dividend payments shall represent 100% of the total carbon fees collected per month.
4. Border Adjustments: In order to ensure that U.S.-made goods can remain competitive at
home and abroad and to provide an additional incentive for international adoptions of
carbon fees, Carbon-Fee Equivalent Tariffs shall be charged for goods entering the U.S.
from countries without comparable Carbon Fees/Carbon Pricing. Carbon-Fee-Equivalent
Rebates shall be used to reduce the price of exports to such countries and to ensure
that U.S. goods can remain competitive in those countries. The Department of
Commerce will determine rebate amounts and exemptions if any.
1 Anderegg, William R. L. et al. “Expert Credibility in Climate Change.” Proceedings of the National
Academy of Sciences 107.27 (2010): 12107–12109. www.pnas.org.
2 Doran, Peter T., and Maggie Kendall Zimmerman. “Examining the Scientific Consensus on Climate
Change.” Eos, Transactions American Geophysical Union 90.3 (2009): 22. CrossRef.
3 IPCC, 2013: Summary for Policymakers. Cambridge University Press, Cambridge, United Kingdom
and New York, NY, USA: Intergovernmental Panel on Climate Change, 2013. Climate Change
2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change.
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4 Hansen, J. et al. “Target Atmospheric CO2: Where Should Humanity Aim?” The Open Atmospheric
Science Journal 2.1 (2008): 217–231. arXiv.org.
5 McMichael, Anthony J, Rosalie E Woodruff, and Simon Hales. “Climate Change and Human
Health: Present and Future Risks.” The Lancet 367.9513 (2006): 859–869. CrossRef.
6 Hughes, I. “Biological Consequences of Global Warming: Is the Signal Already Apparent?” Trends
in ecology & evolution 15.2 (2000): 56–61.
7 Nordhaus, William D. “A Review of the ‘Stern Review on the Economics of Climate Change.’”
Journal of Economic Literature 45.3 (2007): 686–702
8 Hagel, Chuck. Department of Defense: 2014 Climate Change Adaptation Roadmap. Alexandria,
VA: Office of the Deputy Under Secretary of Defense for Installations and Environment, 2014.
9 Borgerson, Scott G. “Arctic Meltdown.” Foreign Affairs Apr. 2008. Foreign Affairs.
10 IPCC, 2013: Summary for Policymakers.
11 Archer, David, Bruce Buffett, and Victor Brovkin. “Ocean Methane Hydrates as a Slow Tipping
Point in the Global Carbon Cycle.” Proceedings of the National Academy of Sciences 106.49
(2009): 20596–20601. www.pnas.org.
12 Weare, Bryan C. “How Will Changes in Global Climate Influence California?” California
Agriculture 63.2 (2009): 59–66.
13 Agricultural Water Management Plan for 2012. Modesto Irrigation District, 2012.
14 Moser, Susanne, Julia Ekstrom, and Guido Franco. Our Changing Climate 2012 - Vulnerability &
Adaptation to the Increasing Risks from Climate Change in California - A Summary Report on
the Third Assessment. California Climate Change Center, 2012.
15 Gleick, Peter H. Water -- the Potential Consequences of Climate Variability and Change for the
Water Resources of the United States. Pacific Institute for Studies in Development, Environment,
and Security, 2000. agris.fao.org.
16 Joyce, B. et al. Climate Change Impacts on Water Supply and Agricultural Water Management in
California’s Western San Joaquin Valley, and Potential Adaptation Strategies. California
Climate Change Center, 2009.
17 Purkey, D. R. et al. “Robust Analysis of Future Climate Change Impacts on Water for Agriculture
and Other Sectors: A Case Study in the Sacramento Valley.” Climatic Change 87.1 (2007): 109–
122. link.springer.com.
18 Cayan, Dan et al. Climate Change Scenarios and Sea Level Rise Estimates for the California 2009
Climate Change Scenarios Assessment. California Climate Change Center, 2009.
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19 Meadows, Robin. “UC Scientists Help California Prepare for Climate Change” in California
Agriculture.” California Agriculture 63.2 (2009): 56–58.
20 Weare, Bryan C.
21 Baldocchi, Dennis, and Simon Wong. “Accumulated Winter Chill Is Decreasing in the Fruit
Growing Regions of California.” Climatic Change 87.1 (2007): 153–166. link.springer.com.
22 Luedeling, Eike, Minghua Zhang, and Evan H. Girvetz. “Climatic Changes Lead to Declining
Winter Chill for Fruit and Nut Trees in California during 1950–2099.” PLoS ONE 4.7 (2009):
e6166. PLoS Journals.
23 Trumble, John T., and Casey D. Butler. “Climate Change Will Exacerbate California’s Insect Pest
Problems.” California Agriculture 63.2 (2009): 73–78.
24 Bale, Jeffery S. et al. “Herbivory in Global Climate Change Research: Direct Effects of Rising
Temperature on Insect Herbivores.” Global Change Biology 8.1 (2002): 1–16. Wiley Online
Library.
25 Kleeman, M. J., S.-H. Chen, and R.A. Harley. Climate Change Impact on Air Quality in California:
Report to the California Air Resources Board. N.p., 2010.
26 Cooley, H., M. Heberger, and L. (Pacific Institute) Allen. Social Vulnerability to Climate Change in
California. California Energy Commission, 2012.
27 Gould, Solange, and Kathy Dervin. Climate Action for Health: Integrating Public Health into
Climate Action Planning. California Department of Public Health, 2012
28 Bedsworth, Louise Wells. Clearing the Air in the San Joaquin Valley: Developing an Action Plan
for Regulators, Legislators, and the Public. Kirsch Foundation, Union of Concerned Scientists,
2004.
29 “Climate Effects on Health.” Centers for Disease Control and Prevention. N.p., 22 Dec. 2014.
30 Cooley, H., M.
31 Nystrom, Scott, and Patrick Luckow. The Economic, Climate, Fiscal, Power, and Demographic
Impact of a National Fee-and-Dividend Carbon Tax. Regional Economic Models, Inc. (REMI)
and Synapse Energy Economics, Inc., 2014.
32 Nystrom, Scott, and Patrick Luckow (REMI study)
33 “Carbon Fee and Dividend.” Citizens’ Climate Lobby. N.p., n.d
https://citizensclimatelobby.org/carbon-fee-and-dividend/. 12 Apr. 2015.
34 Methane is a much more potent greenhouse gas than CO2 with both direct and indirect effects contributing to warming.
It is therefore important to place a fee on methane that leaks to the atmosphere. Some of this leakage will occur after
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the fee has been assessed on methane under the assumption that it will be burned to yield the less potent CO2. To
ensure the integrity of the program and that markets receive accurate information with regard to the climate forcings
caused by various fossil fuels, the carbon fee shall be assessed on such leaked methane at a rate commensurate with
the global warming potential (“GWP”) of methane including both its direct and indirect effects. Given the
importance of tipping points in the climate system, the 20-year GWP of methane shall be used to assess the fee, and
not the 100-year GWP. As proper accounting for such leakage is necessary for honest assessment of progress
towards program goals, reasonable steps to assess the rate of methane leakage shall be implemented, and leaked
methane shall be priced accordingly. The entity responsible for the leaked methane shall be responsible for paying
the fee.
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