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HomeMy WebLinkAboutStaff Report 3.A 11/20/2017Agenda Item #3.A DATE: November 20, 2017 TO: Honorable Mayor and Members of the City Council through City Mana er FROM: Scott Duiven, Senior Planner SUBJECT: Resolution Urging the United States Congress to Enact a Revenue - Neutral Carbon Fee and Dividend Program RECOMMENDATION It is recommended that the City Council adopt the attached Resolution Urging the United States Congress to Enact a Revenue - Neutral Carbon Fee and Dividend Program. BACKGROUND It has been well documented that climate change caused by global warming - related greenhouse gas emissions, including CO2, is already leading to large -scale problems including ocean acidification 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 deaths. In 2005, the City of Petaluma joined the other 9 local governments within Sonoma County and set a mutual greenhouse gas target to reduce emissions to 25 percent below 1990 levels by 2015, one of the most aggressive in the country. Since then, Petaluma has adopted and implemented numerous policies and programs aimed at reducing greenhouse gas emissions. The Citizen's Climate Lobby is a non - profit, non - partisan, grassroots advocacy group focused on national policies to address climate change with over 400 local chapters, including Santa Rosa. The Citizen's Climate Lobby is advocating for a Revenue - Neutral Carbon Fee and Dividend Program. Andy Ferguson, a Petaluma resident, presented this proposal to the City Council during public comment on October 16, 2017 and the Council asked that this item be brought forward on a future agenda. DISCUSSION The Carbon Fee and Dividend Program proposes a steadily rising fee on fossil fuels, initially at $15 /ton of CO2 equivalent emissions of fossil fuels and escalating $10 /ton/year. The fee would be imposed on all fossil fuels and other greenhouse gases at the point where they first enter the economy. The fee would be collected by the Treasury Department, placed in a Carbon Fees Trust Fund, and rebated to American households. Import fees on products imported from countries without a carbon fee would discourage businesses from relocating where they can emit more CO2 and motivate other countries to adopt similar carbon pricing policies. Monthly dividend payments would be made to all American households to help offset the increased energy costs during the transition. The total value of all monthly dividend payments would represent 100% of the carbon fees collected per month, minus administration costs. Estimated monthly dividends for a family of four begin around $50 /month and rise to approximately $400 /month over a 20 year period. A 2013 study by Regional Economic Models, Inc. (REMI), commissioned by the Citizens' Climate Education Corporation (CCE), shows that such an approach will reduce CO2 emissions 52% below 1990 levels in 20 years while providing an economic stimulus that adds 2.8 million jobs and prevents over 230,000 premature deaths by improving air quality. Passage of the resolution (see Attachment 1) would confirm the City of Petaluma's support for the Citizen Climate Lobby's National Revenue - Neutral Carbon Fee and Dividend Program. For more information, a summary of the legislative proposal for the Carbon Fee and Dividend program has been attached (see Attachment 2). FINANCIAL IMPACTS There are no financial impacts other than the staff time and costs associated with preparing this staff report. ATTACHMENTS 1. Resolution 2. Legislative Proposal 2 ATTACHMENT 1 RESOLUTION URGING THE UNITED STATES CONGRESS TO ENACT A REVENUE- NEUTRAL CARBON FEE AND DIVIDEND PROGRAM WHEREAS, the Intergovernmental Panel on Climate Change has stated in its recently released 5th Assessment Report, Climate Change 2013: The Physical Science Basis, that "[ w]arming of the climate system is unequivocal" and "[i]t is extremely likely that human influence has been the dominant cause of the observed warming since the mid -20th century "; and WHEREAS, in May of 2013, the global atmospheric concentration of carbon dioxide reached 400 parts per million, the highest level in the last 800,000 years; and WHEREAS, in May 2014, two separate scientific papers were published in the journals Science and Geophysical Research. Letter documenting dramatic retreats of Antarctic glaciers and predicting that large -scale destruction of the West Antarctic ice sheets is likely now inevitable and will lead to sea level rises of 10 feet or more; and WHEREAS, conservative estimates by climate scientists throughout the world state that to achieve climate stabilization and avoid cataclysmic climate change, emissions of greenhouse gases must be brought to 80 percent below 1990 levels by 2050; and WHEREAS, the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code) commits the state to reduce greenhouse gas emissions to 1990 levels by 2020, and the Governor's Executive Order S -3 -05 further calls on the State to establish a policy to reduce greenhouse gas emissions to 80 percent below 1990 levels by 2050; and WHEREAS, the City of Petaluma supports powerful new policies to meet greenhouse gas emission reduction goals in accordance with the 2015 Paris Climate Agreement despite the United States' formal withdrawal from that accord ; and WHEREAS, the City of Petaluma recognizes the threat that uncontrolled sea level rise moreover recognizes the need for poses to our local well- being, economic activity, and survivability as a community, and continued urgent action on a broad scale to counter the degradation of the natural and economic environment that results from warming temperatures and ocean acidification; and WHEREAS, the United States Congress can enact a national carbon tax on fossil fuels, based on the amount of carbon dioxide the fuel will emit when burned; and 3 WHEREAS, for efficient administration, fossil fuels can be taxed once, as far upstream in the economy as practical, or at the part of entry into the United States; and WHEREAS, a national, revenue- neutral carbon tax starting at a relatively low rate and increasing steadily over future years is a market -based solution that would minimally disrupt the economy while sending a clear and predictable price signal to businesses to develop and use noncarbon -based energy resources; and WHEREAS, the Citizens' Climate Education Corporation Commissioned Regional Economic Models, Inc. (REMI) to do a nation -wide macroeconomic study on the impact of a revenue - neutral carbon tax; and WHEREAS, REMI's study predicted that after 10 years, a revenue - neutral carbon tax would lead to a decrease in carbon dioxide emissions by 33 percent, an increase in national employment by 2.1 million jobs, and an average monthly dividend for a family of four of $288; and WHEREAS, border adjustments such as carbon- content -based tariffs on products imported from countries without comparable carbon pricing and refunds to our exporters of carbon taxes paid can maintain the competitiveness of United States businesses in global markets; and WHEREAS, a national carbon tax can be implemented quickly and efficiently, and respond to the urgency of the climate crisis, because the federal government already has in place mechanisms, such as the Internal Revenue Service, needed to implement and enforce the tax and already collects taxes from fossil fuel producers and importers; and WHEREAS, a national carbon tax would make the United States a leader in mitigating climate change and the advancing clean energy technologies of the 21st Century, and would incentivize other countries to enact similar carbon taxes, thereby reducing global carbon dioxide emissions without the need for complex. international agreements. NOW, THEREFORE, BE IT RESOLVED that the City of Petaluma along with other cities, businesses, and organizations urge the United States Congress to enact, without delay, a tax on carbon -based fossil fuels with the stipulations that: ® the tax should be collected once, as far upstream in the economy as practical, or at the port of entry into the United States; M • the tax rate should start low and increase steadily and predictably to achieve the goal of reducing carbon dioxide emissions in the United States to 80 percent below 1990 levels by 2050; • all tax revenue should be returned to middle- and low- income Americans to protect them from the impact of rising prices due to the tax; • that the international competitiveness of United States businesses should be protected by using carbon- content -based tariffs and tax refunds; and BE IT FURTHER RESOLVED that the City Manager of Petaluma transmit copies of this resolution to the President and Vice President of the United States, to the Speaker of the House of Representatives, to the Majority Leader of the Senate, to each Senator from California in the Congress of the United States, to the member representing Petaluma in the House of Representatives in Congress and to the author of this legislation for appropriate distribution. I ATTACHMENT 2 Legislative proposal: Carbon Fee and Dividend Findings: 1. Causation: Whereas the weight of scientific evidence indicates that greenhouse gas emissions from human activities including the burning of fossil fuels and other sources are causing rising global temperatures, 2. Mitigation (Return to 350 ppm or below): Whereas 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, 3. Endangerment: Whereas further increases in global temperatures pose imminent and substantial dangers to human health, the natural environment, the economy, national security, and an unacceptable risk of catastrophic impacts to human civilization, 4. Co- Benefits: Whereas the measures proposed in this legislation will benefit the economy, human health, the environment, and national security, even without consideration of global temperatures, as a result of correcting market distortions, reductions in non - greenhouse -gas pollutants, reducing the outflow of dollars to oil - producing countries and improvements in the energy security of the United States, 5. Benefits of Carbon Fees: Whereas 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, 6. Equal Monthly Per - Person Dividends: Whereas equal monthly dividends (or "rebates ") from carbon fees paid to every American household can help ensure that families and individuals can afford the energy they need during the transition to a greenhouse gas -free economy and the dividends will stimulate the economy, Therefore the following legislation is hereby enacted: 1. Collection of Carbon Fees /Carbon Fee Trust Fund: Upon enactment, 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 methane, 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 rebated to American households as outlined in 43 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 ('/z 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 net carbon fees collected per month. 4. Border Adjustments: In order to ensure there is no domestic or international incentive to relocate production of goods or services to regimes more permissive of greenhouse gas emissions, and thus encourage lower global emissions, 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. The State Department will determine rebate amounts and exemptions if any.