 on its Wednesday, we know what day that is. It's Hawaii, the state of clean energy day. I meet you here on your host and I'm also the co-chair and sponsor of our sponsor, the Hawaii Energy Policy Forum. And I have to put a plug in for HNEI, we get financial support from the Hawaii Natural Energy Institute. So I'm very pleased to welcome my guests today, Paul Bernstein and Susan Gorman Chang from the Citizens Climate Lobby, Hawaii Chapter. We're gonna be talking about carbon fees and dividends as a powerful climate solution. And we're gonna try to figure out how we can make those dividends, make the best impact though. Susan and Paul, welcome to the show. Thank you. Thank you for having us. So Susan, you won the draws. I understand that you're gonna go first. All right. So first of all, before we get to your slides, you just give us a bit of an overview of who the Citizens Climate Lobby is. And frankly, I've never heard of you before or heard of this organization before. So who are you and what do you do? Okay. It's actually, it's in our slides, but that's okay. I'll go through it now. So we are a non-partisan, non-profit grassroots organization. We have over 600 chapters globally. I mean, so we're in all these different countries and we have over 180,000 members and more than 800 in Hawaii. And we are focused on passing a national carbon fee and dividend policy. And we also have a sister organization called the Citizens Climate Education, which we educate people about this carbon fee and dividend and also about climate change in general. Right. Well, I have a quick little question about if you could like zero in on this focus. Is that what you do? You're looking for this carbon tax or carbon dividend? Is that all you do? It's mainly what we do. So we do a lot of lobbying. It could be testifying for bills that are leading us to this goal. Could be talking to our legislatures. But again, we also have a education component through Citizens Climate Education. So we've done things like had a documentary on a documentary called The Burden where we invited military top brass and officers to talk about how the military is responding to climate change and how serious they know it is the problem worldwide. So yeah, we do have both of those components. Excellent. So let's carry on. Let's go on to your next slide and let's talk about it some more. All right. So my guess is everyone's familiar with the scientific community is saying about the problems with continual increase in man-made emissions of greenhouse gases. So 10 years ago, this talk would have been about scientific findings and whether climate change is really a big problem. And we're pretty much past that. Today, almost all climate scientists agree that global warming is real. It's caused by increased greenhouse gas emissions with about 80% of those emissions coming from the burning of fossil fuel meaning oil, gas and coal. So there's really no longer a scientific debate. The world scientific community is in agreement all national and international academies of science agree, none disagree. And so it's unequivocal and the vast majority of former skeptics are also nodding their heads. All right, exactly. So I just wanna bring up one point though. I mean, you're focused on carbon dioxide I think or carbon. Carbon. But the fossil fuels they also produce are the vast quantities of NOx, of NOx. And in my readings, you know, rounded out, they say that NOx is like 300% more effective or worse than actually carbon dioxide as a greenhouse gas. It doesn't stay in the atmosphere as long until it eventually comes down to the rain. So do you guys actually look at NOx as well or is it the focus? Because it's easy to kind of calculate how much carbon you're throwing out as opposed to the NOx. So you have a comment on that or is that like? Yeah, Paul, did you wanna take that water? Sure. So mainly we're concentrating or focusing on carbon dioxide since that's the primary greenhouse gas accounting for somewhere around 75% of the global warming potential, if you will, when it's around US emissions. The policy that we were pushing, which we'll get into later in the discussion, also did look at the high global warming potential gases. So the HFCs, what have you. But the nitrous oxides and the methane, yes, we recognize it's an issue and that goes to Susan's point about citizens climate lobbying, kind of Mitch to your earlier question that we also support bills that would address some of the other greenhouse gases. Okay, good, because you know, the airline industry is looking at synthetic bio-carbon fuels and yeah, okay, great. But they still throw off massive amounts of NOx when they're flying. So let's have a look at the next slide. All right, so what we're up against. You know, we're already seeing the impact of higher greenhouse gases everywhere. More record setting temperatures, actually both low and high temperatures are in effect of climate change, more extreme weather events, wildfires, hurricane floods, longer and more severe hurricane seasons. We've seen that here in Hawaii. Our rising sea levels that displace low line communities. For example, in Hawaii, we're seeing saltwater flooding through storm drains and we're getting more severe droughts. I was just reading in the Wall Street Journal this morning, Utah and Nevada have had the least amount of rain this year in 126 years. Drought in rising sea levels are creating concerns about future freshwater supplies in Hawaii and of course the increasing ocean temperatures that destroy our coral and make the ocean more acidic disrupting our delicate ecosystems. Yeah, so another phenomena as well. I come from Canada originally and you know, up in the Canadian Arctic, they use ice roads in the winter to haul mining equipment and fuel and all that and the season for ice roads is getting shorter and shorter. I think they're down about three months now. And then of course, you have permafrost up there and as the bogs heat up, they're letting off tons and tons of methane into the atmosphere. So it's a huge, huge issue. So you're very happy to hear that you guys are trying to address this. Yeah, because it starts to get into that sort of a feedback loop where one thing, you know, it makes it worse and worse. And yeah, I'm really concerned about the methane up there and if it really all falls because that's gonna be devastating, you know, if we allow that to happen, if we don't take action. Exactly. Well, let's talk about what's a good solution. Here's all the problems. Who's gonna jump on that? Is that you, Paul? I'm gonna give that to you. Sure, well, I think you two have laid or set the table very nicely as far as why we need to act and kind of what we're up against. So we need a solution that is up to the task and basically see sort of four elements that are on this slide and actually a fifth one I'll mention. So we needed to drive large-scale change, meaning that we need to reduce emissions, a large amount of emissions and we need this to happen quickly given the size of the problem. To do this though, we need to create incentives for people to change their behavior or companies to invest in low-emitting technology. And in doing that though, we needed so that the incentives don't restrict choice. We want consumers to have the maximum set of options. I mean, consumers, there's a great heterogeneity among consumers, among households. So there isn't a one-size-fits-all and the same applies for the business community. We want to allow businesses as much flexibility as possible to address the issues. They may have solutions that nobody else has thought about. In addition, it's important that the policy is fair. It can't fall on the backs of the lower income folks. We really need it to be fair. And going back to what you were saying, Mitch and Susan about the size of the problem, it's going to be around for decades. So we need this policy to be durable or sticky, as some say. So the policy needs to be with us for 10 years, sorry, for decades. So it can't just, we can't go from one administration to the next and have the policy fluctuate on and off. Another thing is, I think it's important that the policy complements other emission-reducing policies. There's not going to be people like to say there is no silver bullet, Ryan Schatz is fond of saying there's silver buckshot. So though we're going to be talking about carbon fee and dividend, it's not the only policy, but believe that it's one that complements many other policies that can be put in place. And last, it's important that it's healthy for the planet that it brings down emissions, but it does it in a cost-effective way that doesn't overly burden our economy. So, this is part of having as much choice as possible, something that incentivizes investments. So again, that we can keep as many jobs or create more jobs or what have you leading to a healthy economy as we decarbonize. Okay, let's have the next slide. And then I want to ask some questions. Okay, so since everybody's asking, what is this policy? So we call it carbon fee and dividend. And this policy, it's just kind of at its simplest in this diagram, it places a fee on fossil fuels. So that's oil, refined petroleum products, natural gas and coal, does it upstream where there are the fewest number of entities in which you need to place the fee. The government collects these fees and then returns 100% of these fees less than any administrative costs returns these to citizen. And an important point going back to the fairness and actually what helps I think in the stickiness and the durability is every citizen gets a check. And the checks are given out, they're all equal shares. So it doesn't matter if you're Bill Gates or one of the three of us or what have you, we all get the same amount in the end. We'll be putting in different amounts because people like Bill Gates, Jeff Bezos or what have you, they purchase a lot of goods and services and carbon or fossil fuels are used to produce those goods and services. So they will be paying a lot more to the government than I think the three of us will probably combine. And yet we get the same check that they get. So this, what we find in economic studies is such a policy is both progressive meaning that it is more advantageous to the lower income folks, but better yet the lower income folks on average actually benefit. They will actually receive more money than they will have to put in. Well, it's fairness thing is a huge issue. And I'll just pontificate a little bit. Like in my previous life when I was in business, I used to run a company in Houston, Texas and I had like 25 branch plants and we were trying to get profitable. So I introduced the concept of profit sharing which is kind of what this is. And so the first couple of months were kind of rocky because it's like, how do you divvy up this money among all the people? Do you do it based on their salary? And so that automatically starts a big food fight amongst everybody in there. They're all like jockeying and like some people are really upset and why should that guy get more than me? And so I went to the other side after I had a little bit of experience and made it all equal. So even the manager of that little company, he got exactly what the guy got who was sweeping the floor. And it really turned the company around like overnight because all of a sudden everybody had a vested interest in profits. So he got to the point where a guy was driving a forklift truck and he was just sitting on the truck and there was something going on. The rest of the workers would razzle about how dare you sit around while we're doing all this work. Get off that truck and help us be more productive so we can get a better profit check. And I also gave him the check every month. And supposed to waiting for the end of the year like the typical bonus, they got it every month. And it was amazing how that incentivized people. So anyway, I just throw that in there as kind of some actual experience that this kind of thing really works. So I'll get up and let you comment on that if you want or we can move on to the next slide. Well, that feeds in the next slide but I'm thinking Mitch that we need to bring you out on the road or when we go and lobby our congressional members and that is a beautiful sales pitch. So actually, so let me feed right into what you said. So the carbon fee and dividend, the policy that we've been putting forward and actually was introduced in the last Congress is called the Energy Innovation and Carbon Dividend Act. It was introduced in a bipartisan manner, slightly bipartisan, full disclosure. There was one Republican representative and about 85 Democratic co-sponsors but it was bipartisan and earlier version actually had three Republicans and four Democrats. But to your point, Mitch, when it comes to the dividend of this bill, the idea is to do exactly what you said, to give people a monthly check and actually prepay monthly checks. So those on the lowest income who don't have extra money when gasoline prices go up or goods and services go up because of the carbon fee, they would actually get a check before the policy went in place. So they have the money for the upcoming month when the prices are a little bit higher, they can afford these. And yeah, so anyways, and to sort of to the same token, it'd be paid out every month so that these people don't have to budget for the whole year. They don't get one lump sum and have to worry about how do I save enough to spread it out over the whole year rather than get the check each month. Backing up a bit, this policy places a fee on carbon emissions. It started at $15 a metric ton. So that's about 13 or 14 cents a gallon of gasoline. And depending on the emission reductions that it achieved, it would rise by 10 or $15 a year all the way up until emissions got, I think reduced by about 90% of where they are today. So what's nice is there's a very set carbon feed trajectory here. So businesses can plan against this. This differs from, for example, a cap and trade where the price can fluctuate all over the place. And it's very hard for businesses to plan or other regulatory policies that make it difficult for businesses to plan. Here they have a set, they see what the price is, you know how the price is changing over time, they can do their net present value calculation and see what projects they wanna undertake. Now, speaking of the business community, another element is if the US is the only country that were to place a carbon fee, it would unfairly disadvantage its own industries relative to industries in other countries that have no carbon price. So to deal with this, the bill also has what's called a border carbon adjustment that essentially puts a tariff on imported goods coming from countries that have no carbon price. So this way businesses wouldn't be, this way businesses don't have an incentive to offshore their production. And last, as a bit of a bipartisan nature, there were some elements in the bill that prohibited certain other regulatory, additional regulatory policies that would somewhat conflict or really be superfluous to the carbon fee and dividend. And in fact, all they would probably do is add administrative burden without really bringing in any additional emission reductions. I'll stop there and let you speak, Matt, sure. Okay, well, yeah, I've got a couple of questions. So first of all, does that tariff go into the pot, like into the funds that gets distributed amongst the people? Can we put a tariff on the goods coming in like you're buying Walmart stuff that they're doing? So the country is gonna raise the cost of the goods. So I'm assuming you just said that the tariff goes into the fund, correct? Right, I believe so. I believe the tariff was designed to go in just as the, you know, if you will, it's a carbon fee on the import. Right, okay. So, you know, I'll introduce this little subject here about our barrel tax, which we have here in Hawaii. I think it's a $1.05 per barrel with aviation fuel excluded. So that generates, I think, I'm not sure my numbers, but it's like a nice chunk of money is about, you know, pushing $30 million. Do you know what it is offhand? It's in that order of magnitude, I think. But then, and so a lot of effort, kind of what you're doing, a lot of lobbying and a lot of public outreach went out to encourage taxpayers to go along with this bill. And actually they got very good response. Blue Planet Foundation went out with quite a breadth of campaign and also did a lot of focus groups and got reactions from the tax-paying public. And the way they sold it was that, hey, we're gonna take that money. In this case, they weren't giving back a dividend to people, but we're gonna use that and invest it in clean energy technologies to reduce carbon emissions and invest in infrastructure that's gonna help decarbonize our economy. And then quick as a flash, the legislature basically grabbed 60% of it to go into the general fund. So the taxpayer looked at this as another tax grab by the legislature who basically reneged on the whole concept. And we're still living with that. I mean, they justified it. That was back in 08 when we went through this big financial crisis and they're laying people off and furloughing teachers in the whole nine yards and they justified it. Oh, we'll just do this to get us through this thing. But of course, it stuck. So how do we get over that? I mean, we can't go back to the taxpayers and try to sell them the same thing over again. Can we? Who wants to talk? Do you want to take this, Susan, since you're most involved with it? Right, right. So first of all, on the federal level, is why we call it a fee and not a tax because it's going to go into a trust fund, which has, you know, there's a little bit, a little ministry of cost and then it goes back to people. You know, that's the way it's supposed to be set up. It's supposed to be set, you know, separate. And again, that's why it isn't called a tax, it's a fee. So that's the idea behind the federal one. The state ones, we can get into a little later. But I guess your question is on the federal level, even if it goes into a trust fund, could that be changed later? Is that the concern? Yeah, basically, basically reneging. You sell it to the community. Everybody says, okay, they don't go to war over it. They say, fine, that sounds really reasonable. I like that. And I really like the idea. I'm going to get this checked every month. And then bang, the government goes and changes the rules and move the goal posts. So that would be actually changing the law, I guess. Cause then you'd have to go back and actually change the way the law was written. They have all sorts of ways of reneging on promises. So, how do you take legislation if they can't do that? I think we see the, what's happened in Alaska with the oil fund, that the state there has had a very difficult time trying to take any of that money away from its citizens for any other uses. And even with the, I think recent deficits that Alaska was facing, they still weren't able to take any money away from the citizen. So I think, I guess I see the national or Hawaii being able to do a similar thing. As long as the money is great enough, I think part of the problem is with a dollar five, it's just, I mean, it is enough money in the sense that as you said, it's $30 million or so, which is nothing to sneeze at. But once you spread it out over one and a half million people, it's not that big of a deal. The type of the policy here that Susan had a big part in pushing carbon cash back in Hawaii, we were starting, or that policy was starting at a level basically 15 times that. So a barrel tax around $15 to $20, which equates to around $40 a metric ton of carbon dioxide or about 35 cents a gallon of gasoline and then rising over time. And I think something like that, it would be a lot harder. People would recognize that check and would be very aware if that check were taken away from them. So you make the political penalty so big that they wouldn't dare do it. That's what we're saying. So the other part of my question then is, how are we doing on the policy side? Maybe Susan can answer that. Are you talking at the federal level or? Yeah, whatever level you're talking about. Yeah. Well, it hasn't been introduced again, right, Paul? Right, so the representative who introduced it in the last congressional session is looking to reintroduce it again. That's representative Deutsch. On the Senate side, Senator Coons is looking to reintroduce something similar. And actually our own Senator, Brian Schott, had a bill with, I believe it was three other senators. Senator Whitehouse was the, it was Schott's and Whitehouse had essentially a carbon fee and dividend bill where a good chunk of the money went back to citizens and a good chunk of the money also went to the state. But basically I would say in sort of a block grant fashion where the money, each state had the flexibility what to do with the money, but it was supposed to be directed towards lower income folks or programs to help lower income folks. So according to Senator Schott, he plans to reintroduce his bill. My guess is people are still waiting a bit. Well, that there was a sequencing issue here that needed to get through the $1.9 trillion package. And now my guess is that they will turn to climate change. And so we'll see what happens. We have about two minutes to go. So I wanna go to slide nine. Okay. So we can talk about the local legislation. So here's what happened. So like I said, citizens climate lobby also, educates and can partner with other groups. So we faith action for community equity put forth two of these bills, House Bill 134 and Senate Bill 311, which are identical, they're called companion bills cause they're introduced in each house, right? That was introduced. There was also some of these other ones but we really wanted that one because that was, had all the money going back to the people. Unfortunately, the house told us, well, these are all carbon fees and we're just gonna introduce one of them. We're just gonna send one of them to the committees. And that turned out to be House Bill 1319. So we kind of regrouped and we said, okay, we support this, but with an amendment that all the money goes back to the people because the way HB 1319 was written, it was a tax credit and part of it would go back to the people but part would go back to the dreaded general fund. So we gave testimony. It got through the first committee and it died in the second committee, which was commerce and consumer protection. And one of the comments was, well, we're just not sure how this will impact low income folks, right? And we need more study. Well, lo and behold, let's see, about a week later, the Hawaii Carbon Pricing Study came out and that showed that, that study showed that a fee or tax on carbon that was returned to residents of Hawaii would benefit lower income households and reduce Hawaii's emissions. Unfortunately, all the bills have died. So we're hoping maybe next session. Nothing done on the federal level. So when you looked at the testimony that they published all the testimony, were there any people against this bill or was it generally supportive? When I counted up, it was more support than not. But of course, there were some of the usual suspects of some business groups, but not very many. And also some that thought, well, this isn't gonna solve the whole issue kind of thing. And our point is just like on the federal level, there's no silver bullet, but this is a really good start. I think it will sort of give people a nudge to change their behavior. I went back and looked at data of a bus ridership when the gasoline cost here was approaching $5 a gallon, right? Oh yeah, yeah. Yeah, as the cost of gas goes up, so does the ridership and then as it goes down, it goes back down. So we know it can change behavior, you know? So yeah, that's where we are. We're gonna keep going for next year. Well, believe it or not, we've gone through 30 minutes. I'm getting signals to wrap it up. So I'd like to really thank Paul Bernstein and Susan for coming on my show today and educating us about this. And I'd like you guys to come back once we get maybe next session and we can help get your bills through the legislature faster, quicker, better, whatever. Now we're more educated. Usually it takes about three years. So anyway, I need to wrap up and thank you so much. Thank you, Mitch. I appreciate it. And to everybody out there, Aloha and we'll see you next Wednesday in Hawaii, the state of clean energy alone.