A Framework of Greenhouse Gas FeeBates

As is now abundantly clear, we cannot continue releasing emissions into the atmosphere as we have done in the past. Emissions should be cut dramatically everywhere around the world, the sooner the better.

We need to change our ways and we need policies that facilitate such changes. In the past, government has all too often supported and protected the wrong parties. That simply has to end!

While there should be a global commitment to reduce emissions, there's no reason to impose a single global policy on how to achieve reductions. As long as reduction targets are reached, it makes sense for each area to decide on how to get there. After all, there are different ways to reduce emissions and conditions differ from area to area. In one areas, a certain policy may work well, but in another area a different policy may make more sense.

At the same time, I am convinced that the most effective way to achieve reductions in greenhouse gas emissionsis to implement framework of FeeBates. Within such a framework there can be several feebates, each tailored to achieve a specific local shift, and in each case fees are imposed on specific polluting products, and the proceeds will be used to fund local rebates on clean and safe alternatives. As an example, a 10% fee can be imposed on sales of new gasoline cars, with the proceeds funding rebates on local sales of new zero-emission cars.

FeeBates are the most effective way to deal with the problems, since they work by addressing the problems as directly as possible. The combination of fees and rebates makes the policy doubly effective, compared with a policy of taxation only, or of subsidies only. Also, the wrong combination of tax and subsidies can be counter-productive.

A FeeBate policy works without nurturing either a government bureaucracy or a society governed by lawyers or by a corporate cartel. There's no need for a battery of public servants to administer a FeeBate policy. Market mechanisms can sort out what works best where. The main criterion in allocating rebates should be that alternatives are safe and clean. It's budget-neutral, if the fees accumulate into a pool of money that is then used to fund rebates on a first-come-first-served basis. This way, the policy maximizes choice for both consumers and business, while the policy phases itself out over time as the necessary shift eventuates.

What's needed is global commitment and local implementation. The proceeds of fees are best spent to remedy the situation in that area. Where most money is raised, there's also the most need for change, so that's where the biggest effort should be made to support better alternatives, in order to remedy the problems in that area.

A 10% fee seems high enough to be effective over time, yet small enough not to be disruptive. It's also small enough to avoid that people will seek ways to bypass the policy. Nevertheless, it should be left up to local communities to set the percentage of fees on the various products, depending on how much they are a problem in the respective area. The percentage can then be adjusted in line with how successfully emissions are reduced locally.

Similarly, alternatives eligible for rebates could differ from area to area. Countries only need to agree on a joint commitment to meet targets to reduce emissions. Where targets are met, feebates in the respective area can be relaxed, if people want that. However, where targets aren't met, the policies should be tightened, i.e. percentages should be increased and the proceeds should be passed on in the form of rebates more rapidly.

In conclusion, what's needed is a global commitment to implement FeeBates, backed up by trade sanctions against non-cooperative countries, e.g. by imposing tariffs on products from countries refusing to tackle polluting practices. While it makes sense to use the existing appeal mechanisms of the World Trade Organization (WTO) to resolve trade disputes between countries, the WTO should not overrule the gist of the above policy framework. Where needed, trade agreements can be adjusted to incorporate the above.

Eight FeeBates proposed
by Sam Carana

Fees on sales of new gasoline cars, with proceeds used to fund rebates on zero emission cars;

Fees on sales of fossil fuel, with proceeds used to fund rebates on purchase and installation of renewable energy facilities;

Fees on larger vehicles, such as trucks and buses, as well as airplanes and ships, with the proceeds used to fund rebates on fuel cells, electrolyzers, hydrogen storage tanks and hydrogen filling stations;

Fees on polluting concrete (i.e. that contributes to global warming), funding rebates on clean concrete;

Fees on sales of tropical hardwood, with proceeds funding rebates on building material made from biowaste;

Fees on wood-ovens, funding rebates on solar cookers;

Fees on nitrogen fertilizers, funding rebates on AgriChar;

Fees on sales of meat, funding rebates on vegan-organic food.

As an example, the US can achieve an 80% cut in carbon dioxide emissions simply by shifting from burning fossil fuel to using electricity instead.

Read more on Agrichar, meat, solar cooking, carbon-negative building, hydrogen and other selected topics at How to act on global warming.

For more details on FeeBates, check out
http://feebate.net

Comments: 6

Rose T. May 15, 2008, 10:03pm EDT

Makes sense to me! Thanks for the info Sam!

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Peter C. Frank May 15, 2008, 10:33pm EDT

Sounds like a plan to me!

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Sam Carana May 17, 2008, 10:55pm EDT

Thanks, Dan and Rose, your comments are much appreciated. Hi Peter, good to meet you! I've advocated a Feebate policy in many earlier articles and comments here at Gather, such as in the article The FeeBate Debate last year.

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