Pollution Fee and Dividend White Paper

Carbon emissions pose an urgent public health problem, with fossil fuel combustion-related pollution contributing to 8,312 premature deaths annually in New Jersey. Furthermore, New Jersey faces significant threats from climate change: sea-level rise alone is projected to force 174,000 – 480,000 New Jersey residents to relocate by 2100. New Jersey faces extensive economic and human costs from increased extreme weather and flooding, agricultural and fishing damages, heat-related health problems, and increased rates of disease. It is clear that we must take action to combat carbon emissions, but an effective solution must balance the need to cut emissions with maintaining the health of New Jersey’s economy.

A carbon fee and dividend policy presents a simple, efficient solution to carbon emissions, while promoting the economic welfare of many New Jersey citizens and businesses. It has a proven track record: previous carbon fee policies have significantly reduced emissions without hurting the economy in British Columbia, Canada; Denmark; Ireland; and Boulder, Colorado. This policy places a fee on emissions-generating fuels, making carbon pollution more expensive and adjusting the market to reflect the social costs of carbon. This encourages actors across the economy to reduce their emissions. The vast majority of the money collected under the fee will be returned to households and vulnerable businesses through dividends to help adapt to the increases in energy costs, ensuring that this policy does not significantly harm low and moderate-income families. In addition, a portion of the collected fees may be used for investment in programs with significant emissions-reduction potential and adaptation to the threats posed by carbon emissions, climate change, and a changing energy economy.

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