Title
Adoption of Resolution Urging the United States Congress to Enact a Federal Carbon Fee and Dividend. (Public Works 4205)
Body
To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Adoption of Resolution Urging the United States Congress to Enact a Federal Carbon Fee and Dividend
BACKGROUND
The City of Alameda’s (City) Local Action Plan for Climate Protection, adopted in 2008, establishes a goal of reducing greenhouse gas emissions by 25 percent by the year 2020. The City is tasked with implementing the climate mitigation strategies that are listed in the Local Action Plan for Climate Protection to achieve this goal. The City also relies on state, federal, and international policies to reduce carbon emissions.
Established as a volunteer-driven, non-partisan lobbying organization in 2007, Citizen’s Climate Lobby (CCL) has proposed a Revenue Neutral Federal Carbon Fee and Dividend Plan as an effective tool for reducing carbon dioxide emissions. The Carbon Fee and Dividend proposes a fee on carbon at the source, and provides rebates back to households, making the measure revenue-neutral. The goal is to equalize the true cost of fossil fuels and to encourage the development of clean energy.
DISCUSSION
Cities and counties from around the country, as well as the state of California, have approved official resolutions in support of a Carbon Fee and Dividend. Municipalities in the Bay Area that have adopted similar resolutions include San Francisco, Berkeley, Oakland, Richmond, Albany, Marin County, and Los Altos.
Adopting a Resolution Urging the United States Congress to Enact a Federal Carbon Fee and Dividend is consistent with the City’s 2017 Legislative Agenda adopted on March 21, 2017, which supports legislation that promotes environmental protection and sustainability.
An environmental and economic benefits study shows, within 20 years, that a carbon fee and dividend would reduce carbon dioxide emissions by 52 percent below 1990 levels, create an economic stimulus that would add 2.8 million jobs to the economy, and prevent over 230,000 premature deaths from improved air quality. A structured rising price on greenhouse gas emissions would focus business planning on optimizing investment priorities to thrive in a carbon-constrained world.
CCL’s proposal includes the following three elements:
1. Place a steadily rising fee on fossil fuels (coal, oil, and gas).
To account for the cost of burning fossil fuels, CCL proposes an initial fee of $15 per ton on the carbon dioxide equivalent emissions of fossil fuels, escalating $10 per ton per year, imposed upstream at the mine, well, or port of entry. Accounting for the true cost of fossil fuel emissions not only creates a level-playing field for all sources of energy, but also informs consumers of the true cost comparison of various fuels when making purchase decisions.
2. Give all of the revenue from the carbon fee back to households, less administrative costs, each month.
The tax would be revenue neutral in that all of the proceeds would be collected by the Treasury Department and after administrative costs are covered, 100 percent of the remaining revenue would be rebated to American households as a monthly dividend. It is estimated that the vast majority of households will receive more than they will pay for increased energy costs.
3. Use a border adjustment to discourage business relocation.
Import fees on products imported from countries without a carbon fee, along with rebates to U.S. industries exporting to those countries, will discourage businesses from relocating where they can emit more CO2 and motivate other countries to adopt similar carbon pricing policies. Building upon existing tax and trade systems will avoid complex new institutional arrangements. Firms seeking to escape higher energy costs will be discouraged from relocating to non-compliant nations (“leakage”), as their products will be subject to import fees.
FINANCIAL IMPACT
There are no direct fiscal impacts associated with this action.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
Undertaking the Climate Plan Update is consistent with the General Plan, which states:
• Safety and Noise Element Objective (8.3): “Minimize risks of loss of life, personal injury, property damage and environmental degradation posed by sea level rise, flooding and storm water runoff.”
ENVIRONMENTAL REVIEW
The goals of a national carbon fee are to accelerate the reduction of carbon emissions and are consistent with the goals of Alameda’s Local Action Plan for Climate Protection.
The action is exempt from the California Environmental Quality Act (CEQA) because it is not a “project” under Section 15378(b)(5) of CEQA Guidelines. The action involves an organizational or administrative activity of government that will not result in the direct or indirect physical change to the environment.
RECOMMENDATION
Recommendation to adopt a resolution urging the United States Congress to enact a federal carbon fee and dividend.
Respectfully submitted by,
Liam Garland, Public Works Director
By,
Gail Payne, Transportation Coordinator
Financial Impact section reviewed,
Elena Adair, Finance Director