Revenue-neutral Carbon Fee & Dividend March 31, 2015 Company LOGO

2 Citizens’ Climate Lobby’s Focus Lobby U.S. Congress to pass “carbon fee and dividend” legislation –Put a price on carbon –Fossil fuel use declines –Alternate energy economy grows –Less carbon is emitted Company LOGO

3 Carbon Fee and Dividend How it works: Apply fee to all fossil fuels and other greenhouse gases (GHG) Fee is $/ton of CO2 equivalent emissions and results in equal charges for each ton of CO2 equivalent emissions potential in each type of fuel or GHG Collect the fee as far upstream in the economy as practical Steadily increase the fee each year Company LOGO

4 Carbon Fee and Dividend How it works (cont’d): 100% of fee revenue is returned to households Monthly dividends are in equal shares 2/3 of Americans break even or come out ahead Company LOGO

5 Carbon Fee and Dividend Provides a price incentive: Rising private investment in alternate energy, energy efficiency Falling investment in fossil fuels Consumers switch to energy efficient products Company LOGO

6 Carbon Fee and Dividend …and business: Predictable fee simplifies business planning Businesses pass along increased costs Border adjustments protect domestic manufacturers and exporters Company LOGO

7 Carbon Fee and Dividend Border tax adjustments Company LOGO Price carbon or pay a border tariff

8 Carbon Fee and Dividend …and government: “Revenue neutral” with respect to federal budget Administered by existing government agencies Does not increase the size of government Company LOGO

9 Carbon Fee and Dividend Bipartisan appeal: Republicans like revenue neutrality Republicans – like free market approach and dislike EPA regulation Democrats increasingly favor carbon fee Democrats - accept revenue neutrality Company LOGO

10 Carbon Fee and Dividend Example: Fee starting at $15 per ton of CO2 Gasoline price increases 14 cents per gallon Electricity prices up.81 cents/kWh (8%) Monthly dividend $54 per household Company LOGO

11 Carbon Fee and Dividend Example Year 10: Fee is $15/ton first year; increases $10/year Gasoline price up $1.08/gal after ten years Electricity price up 3.61 cents/kWh (32%) Monthly dividend $324 per household CO2 emissions reduced to 69% of 1990 levels Company LOGO

12 Carbon Fee and Dividend In ten years, clean energy becomes cheaper than carbon-based energy; electricity generation from coal phased out. Company LOGO

13 REMI: Report “The Economic, Climate, Fiscal, Power, and Demographic Impact of a National Fee-and-Dividend Carbon Tax” By: Regional Economic Modeling Inc. (June 9, 2014) Company LOGO

14 REMI: Report Summary Impact of Carbon Fee and Dividend Company LOGO

15 REMI: Report Summary No economic case against Carbon Fee Company LOGO Economic Climate Fiscal Humanitarian ●2 million more jobs ●Reduces carbon dioxide ●Increases household incomes incomes ●Saves Lives

16 Carbon Fee or Cap? Citizens’ Climate Lobby supports: A Carbon Fee and Dividend policy proposal This approach has several advantages Company LOGO

17 Advantages of a Carbon Fee A carbon fee lends predictability to energy prices, depending on hindsight rather than foresight Businesses and consumers can plan investments accordingly Company LOGO

18 Advantages of a Carbon Fee Transparent and easily understandable Can be set up in a short time without additional bureaucracy Has low administration costs Less open to the opportunity for manipulation by special interests Company LOGO

19 Advantages of a Carbon Fee Addresses emissions from every sector More easily lends itself to border adjustments between countries with different or no carbon fees Company LOGO

20 Advantages of a Carbon Fee Politically.... Republicans opposed to cap because of bureaucracy Democrats opposed to trading because it causes fluctuations in price of energy Company LOGO

21 Advantages of a Carbon Fee CCL believes a straight forward rising fee is a more efficient mechanism for reducing emissions than a declining cap, and that it has a better chance of garnering bipartisan support. Company LOGO

22 Federal Carbon Pricing Legislation* Both revenue neutral and 100% of revenue returned to citizens! McDermott: Managed Carbon Price Act of 2015 Pricing: Secretary of Treasury and the EPA set the prices of permits. Where assessed: Midstream to upstream Goal: Emissions 80% less than 2005 levels in Revenues: Monthly dividend checks to individuals * as of March 2015 Company LOGO Jim McDermott Representative (D – WA)

23 Federal Carbon Pricing Legislation* Both revenue neutral and 100% of revenue returned to citizens! Van Hollen: Healthy Climate and Family Security Act of 2015 Pricing: Secretary of Treasury and the EPA will determine initial quantity of carbon permits to be auctioned (4 auctions a year). Where assessed: Midstream to upstream Goal: 80% less than 2005 levels in 2050 Revenues: Quarterly payments to individuals * as of March 2015 Company LOGO Chris Van Hollen Representative (D – MD)

24 Questions Company LOGO