An Analysis of the Baker-Shultz Carbon Dividends Plan
WASHINGTON—An issue brief posted today by Resources for the Future (RFF) uses modeling to examine the plan called, “The Conservative Case for Carbon Dividends.” The plan was put forward in February 2017 by the Climate Leadership Council (CLC), which included prominent conservative stalwarts George P. Shultz and James A. Baker III. This new modeling analysis of their plan was conducted by RFF Fellow Marc Hafstead. In it, Dr. Hafstead exclusively examines the part of the overall CLC plan calling for the implementation of a gradually increasing carbon tax.
Dr. Hafstead’s modeling shows that in the absence of carbon pricing or other regulations, energy-related CO2 emissions are expected to remain relatively flat through 2035. In 2021, with the initial CLC carbon price of $43, emissions are projected to drop by about one billion metric tons, a 19 percent reduction relative to business as usual. Emissions after 2021 depend on the growth rate of the tax over time.
In 2025, emissions vary between 3.8 and 3.9 billion metric tons (34–36 percent below 2005 energy-related CO2 emissions). By 2035, the difference in emissions levels across growth rates becomes more pronounced—a difference of 0.4 billion metric tons between the lowest and highest growth rate scenarios. Under the 5 percent growth rate, energy-related CO2 emissions are 45 percent below 2005 levels in 2035.
Read the full issue brief: Analysis of Alternative Carbon Tax Price Paths for the Climate Leadership Council (CLC) Carbon Dividends Plan.
Resources for the Future (RFF) is an independent, nonprofit research institution in Washington, DC. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy.
Unless otherwise stated, the views expressed here are those of the individual authors and may differ from those of other RFF experts, its officers, or its directors. RFF does not take positions on specific legislative proposals.
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