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Comment 6 for Public Workshops on Investment of Cap-and-Trade Auction Proceeds to Benefit Disadvantaged Communities (sb-535-guidance-ws) - 1st Workshop.
First Name: Mike
Last Name: Sandler
Email Address: mike@carbonshare.org
Affiliation: CarbonShare.org
Subject: Cap and Trade proceeds can help low-income households with dividends
Comment:
Dear ARB, Returning proceeds to disadvantaged communities is well-intentioned, but will the funds actually help individuals, households, and communities who carry a disproportionate burden of emissions, poverty, and future regressive carbon price impacts? Please consider these issues below as rules for distributing cap and trade funds are developed. 1) Emissions reductions paid for with cap and trade revenues will result in no net emission reductions. This may sound counterintuitive, but the reason is because the cap sets the emissions level, and so additional emission reductions paid for with cap and trade funds will result in a lower price for allowances, but that reduction in price signal will encourage companies to increase emissions back to the level of the cap. The lesson here is that cap and trade funds should be put towards other goals of AB32, not just emission reductions. One of those goals is to alleviate impacts on disadvantaged communities and households, so the State can still fulfill its noble goals there, while preserving a higher carbon price signal. 2) Is it better to create programs for low-income and disadvantaged communities, or is it better to return the funds directly to those households? Most government workers and program administrators will say the programs are preferred (by them), but it would be useful to ask non-program-affiliated individuals and families in those areas if they would rather have certain programs, or if they would prefer a cash transfer that allows them to decide what to do with the money (a climate "dividend"). In the absence of such a survey, it is only speculation that programs are preferred by the communities themselves. Skepticism that the money would actually reach families may lead some respondents to hesitate in their answer. This is a reflection of the unfortunate history of appropriation of funds that do not reach the intended recipients. That skepticism is understandable. The cap and trade funds provide an opportunity for ARB to improve the perception of the cap and trade program overall by ensuring the funds are returned directly to people. In the international development field, researchers are studying the effects of programs that provide direct cash transfers (a well-known one is called "Give Directly") on the poor. The sad counterpoint is the funds sent to Haiti for relief efforts, with no documented outcome. The goal here would be to alleviate impacts on low-income and disadvantaged communities and provide a template for a future national cap and dividend program. How do regulators in Sacramento know if a family has health care expenses, or need funds for bus fare, or any number of other impacts that a carbon price may have. The families that receive a climate dividend can make that decision the best. Would the funds be "wasted" on big screen TVs? Once again, it doesn't matter, since the cap sets the level of statewide emissions. But the State can encourage families to spend their dividends on low-carbon products such as Energy Upgrade California, or potentially transit subsidies, etc. But it should be up to the individuals receiving their share of the atmospheric commons to decide how to spend their windfall. Further information may be found in the recent book by Peter Barnes, "With Liberty and Dividends for All" and on my website www.carbonshare.org. This is a hugely important topic, how to alleviate poverty while addressing climate change. They are interconnected. Thank you for your consideration. Mike Sandler www.carbonshare.org
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Date and Time Comment Was Submitted: 2014-08-29 10:24:10
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