1. Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift © http://PriceonCarbon.org

2. Costs of fossil fuel use are not included in the current price Hurricanes (Sandy $65b), drought, health costs, sea level rise Social Cost of Carbon estimates from $37 to >$400/ton CO 2 e Fossil fuels are artificially inexpensive Put a price on carbon emissions so users pay the fair price Fossil fuel use will decrease; CO 2 emissions will decrease Alternatives become more affordable and grow The economy can also grow Carbon Pricing 101 Putting the Market to Work PriceonCarbon.org © http://PriceonCarbon.org

3. Pricing Carbon is not a new idea Figure from World Bank report, 2014 © http://PriceonCarbon.org

4. How Do You Price Carbon? © http://PriceonCarbon.org Carbon Pricing Elements Pricing Mechanism Emissions Included Revenue Use

5. How Do You Price Carbon? © http://PriceonCarbon.org Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Emissions Included Revenue Use

6. Pricing Mechanism © http://PriceonCarbon.org Both mechanisms have been tried; both can be effective.

7. Linda Swift © 2015 Declining Cap Set by Government Maximum Emissions Allowed Cap Year 1 Year 2Year 3Year 4 Company A Cap and Trade © http://PriceonCarbon.org

8. Linda Swift © 2015 Permits Auctioned by Government Company A emits above cap, needs more permits Company B buys more permits than needed Company B Cap Company A EmissionsPermits EmissionsPermits © http://PriceonCarbon.org Cap and Trade

9. Company B sells permits to Company A Company B Company A EmissionsPermits EmissionsPermits © http://PriceonCarbon.org Cap and Trade

10. Linda Swift © 2015 Company B sells permits to Company A Company B Company A EmissionsPermits EmissionsPermits © http://PriceonCarbon.org Cap and Trade

11. Allocations Allowances (permits) can be given by government to select companies or industries “Free permits” May decrease with time Emissions Permits Cap Allocations “Free Permits” Company A © http://PriceonCarbon.org Complications

12. Offsets Projects which sequester carbon can offset some emissions/permits Emissions Permits Cap Offset Company A © http://PriceonCarbon.org Complications

13. How Do You Price Carbon? © http://PriceonCarbon.org Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Emissions Included Electricity generation Transportation Industrial Revenue Use

14. Emissions Included © http://PriceonCarbon.org EIA

15. How Do You Price Carbon? © http://PriceonCarbon.org Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Emissions Included Electricity generation Transportation Industrial Revenue Use Government Programs Mitigate/adapt Reduce deficit Infrastructure, etc Revenue Neutral Return to people Reduce other taxes

16. How Do You Price Carbon? © http://PriceonCarbon.org Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Revenue Use Government Programs Mitigate/adapt Reduce deficit Infrastructure, etc Revenue Neutral Return to people Reduce other taxes California

17. How Do You Price Carbon? © http://PriceonCarbon.org Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Revenue Use Government Programs Mitigate/adapt Reduce deficit Infrastructure, etc Revenue Neutral Return to people Reduce other taxes Van Hollen Bill

18. How Do You Price Carbon? © http://PriceonCarbon.org Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Revenue Use Government Programs Mitigate/adapt Reduce deficit Infrastructure, etc Revenue Neutral Return to people Reduce other taxes CCL

19. How Do You Price Carbon? © http://PriceonCarbon.org Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Revenue Use Government Programs Mitigate/adapt Reduce deficit Infrastructure, etc Revenue Neutral Return to people Reduce other taxes British Columbia

20. For more information… © http://PriceonCarbon.org http://PriceonCarbon.org