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About the study: 

Summary of "The Economic, Climate, Fiscal, Power, 

and Demographic Impact of a National 

Fee-and-Dividend Carbon Tax" By REMI and Synapse 

Summary by Danny Richter, Ph.D. 

Citizens' Climate Education Corporation (CCEC) and Citizens' Clilnate Lobby (CCL) 

contracted a third party, Regional Economic Modeling, Inc. (REMI) to do a nation-wide study on the 

impact of its Fee and Dividend (FAD) policy. The policy modeled is not a perfect representation of 

FAD (most obviously, FAD begins at $15 per ton whereas the study began at $10 per ton), but it is 

quite close, and accounts for the impact FAD's border tariff adjustment would have on the US 

cconmny. REMI used three models to do the study~ 1. The Regional Energy Deployment System 

(ReEDS) built by the National Renewable Energy Laboratory and run by Synapse Energy Economics; 

(2) the Carbon Analysis Tool (CAT); an enhancement of the open-source ClAM model and populated 

by data from the US Energy Information Administration (EIA)~ and (3) REMI PI+, a proprietary 

dynamic model ofsubnational units ofthe United States' economy whose methodology and equations 

are peer-reviewed and available to the public. Output included impacts on 160 industries, nationally 

and regionally for the 9 "U.S. Census" regions commonly grouped together in a number of federal data 

sources and in the energy n1arkct forecasts from the EIA. 

Model results were able to esrin1ate the effects of the policy on GDP, personal income, 

employment, prices, carbon dioxide emissions, mortality due to NOx and SOx etnissions~ revenues, 

monthly dividend amount, energy generation capacity by technology. energy generation by type, 

investment in power, population, and economic migration on both a regional and national level. Income 

and employment figures for each of 160 industry categories considered are included. These 160 

industries encompass the entire economy. 

The results are all relative to a baseline case where there is no carbon tax (modeled by using the 

exact same set-up~ with a $0/ton value for the carbon tax). In other words, all three models were run 

two times. Both times, the set-up was identical except for one thing: the price of carbon was either $0 

from 2016-2035, or was $10 per ton in 2016 and increased by $10 every year after that. 

\\'hy should we trust REl\fi? 

CCL hired REMI because we are committed to quality data free of ideological taint that you 

might get from some think tanks. As its name suggests, REMI models regional economics. It does this 

well. Founded in 1980, REMI's modeling products grew from one of the first regional macroeconomic 

models ever created; the Massachusetts Economic Policy Analysis (MEPA) model. This model was the 

product of collaborations between REMI's founder, a Nobel prize winner, and two other respected 

economists. Close links to the upper echelons of academia have persisted throughout REMI's 3+ 

decades of experience, resulting in several academic publications in journal such as the American 

Economic Review, the Review of Economics and Statistics, and the Journal of Regional Science. 

This experience and expertize is why private and public entities from all across the political 
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spectrum have entrusted REMI to do their analyses, and paid them well for that expertizc. These fanner 

clients include, but are not limited to: the Ametican Gas Association (AGA), the Nuclear Energy 

Institute (NEJ ), the National Federation of Independent Business (NF1B), the National Education 

Association (NEA), the International Brotherhood ofTemnsters, Booz Allen Hamilton. EY (formerly 

Ernst and Young), PWC (formerly Price \Vaterhouse Coopers), and ICF International. Like CCL and 

CCEC, REMI is truly nonpartisan. 

In that same spirit. CCL and CCEC did not attempt to influence the outcome of the report in any 

way. In fact, we were excited when we saw that the study had some dark spots, because that speaks to 

the integrity of rhe analysis. Our first priority is a livable worltL and we can't get there without an 

honest and clear-eyed view of the facts. 

Study Highlights: 

6,000 

• C02 emissions decline 33%, 

after only 10 years, and 5 2~o 

after 20 relative to baseline. 

(Figure 1) 

"'5,000 

c 

.s 

·~ 4,000 

Ql 

E3ooo o' 

• 

• 

National employment increases 

by 2.1 million jobs after I 0 

years, and 2.8 million after 20 

years. This is more than a 1 o/o 

increase in total US employment 

we don't get without a carbon 

tax! {Figure 2) 

13,000 lives arc saved annually 

after 1 0 years, with a 

cumulative 227.000 American 

lives saved over 20 years. 

(Figure 3) 

! 2,000 

~ 1000 

0 ~ w ~ oo m o ~ N ~ ~ ~ ~ ~ oo m a rl N m ~ ~ 

rl rl rl rl rl N N N N N N N N N N M M M M M M c c 0 0 0 0 0 0 0 c c 0 0 0 0 0 0 0 0 0 0 NNNNNNNNNNNNNNNNNNNNN 

· NEMS/ReEDS Baseline CAT/ReEDS Alternative 

Figure 1: U.S. C02 emissions under FAD (yellow) and without a 

carbon tax (blue). FAD reduces US emissions to 69% of 1990 levels by 

2025, and to 50% by 2035. 

• $70-$85 billion increase in GOP from 2020 on, with a cumulative increase in national GOP due 

to f'AD of $1.3 7 5 trillion. 

• SIZe of monthly dividend for a family of4 with two adults in 2025 = $288, and in 2035 = $396. 

Annually, this is $3,456 per family of 4 ($1152 per capita--children get Y2 dividend) in 2025. 

Electricity prices peak in 2026, then strut to decrease. 

• Maximum cost-of-living increase by 2035 is 1.7-2.5%, depending on region. 

Real incomes up over $500 per person in 2025; this is after accounting for cost of living 

increases. 

• By 2025, up to $400 billion in carbon tax revenues, all of which is returned to American 

households. 

• Electricity generation from coal is phased-out by 2025. 

Biggest employment gains in hcalthcare, retail, and other services {excluding public 

administration). This is because people have more money in their pockets to spend, and these 

industries arc most boosted by consumer spending. 

Regional Gross Product is steady or rising in 8 of 9 regions. 
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Ill 

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~ 2/>00 

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{; 1,000 

; 

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Figure 2: Thousands of jobs created by FAD relative to the 

case without a carbon tax. Over a million jobs created within 

4 years, over 2 million within 9 years. 

·2SO 

j' -200 

~ 

~ -150 

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{; 

~ 100 

0 

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·PAC 

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Figure 3: Cumulative lives saved fmm avoided emissions 

by region under FAD. Region ENC, including Ohio, Indiana, 

Michigan. Illinois, and Wisconsin, has the most lives saved. 

227.000 American lives would be saved in 20 years under 

FAD. 

Why Haven't Previous Studies Found Such Positive Impacts? 

The n1ajority of previou..<; reports considering a carbon tax have not n10deled a completely 

revenue-neutral carbon tax. do not envision a policy with such an aggressive rate of increase~ do not 

have the same detail as REMI can provide, do not consider a 1 00~/o dividend~ and do not report health 

benefits. \\'here revenue-neutrality was Inodcled, a "double-dividend" was often discovered in which 

carbon emissions were reduced and the output grew. As these previous studies have highlighted, 

including a May 2013 study by the Congressional Budget Office {CBO), a carbon tax without revenuerecycling is a cotnpletely different animal from a carbon tax that does recycle revenue. The two 

policies. revenue-neutral carbon tax and a carbon tax without revenue returned, should not be confused 

in tenns of their effect on the economy. 

Failing to consider such a rapid rate of increase in the carbon tax prevents previous studies frmn 

realizing the magnitude of emissions reductions and scale of economic benefit reported in this study. 

Often, this is because rates of increase were not considered politically feasible. Most other models~ nm 

by acade1nics or think tanks, do not have the detail provided by REMI. Over the past 3 decades, 

REMl's regional modeling techniques have been refined, detail has been added, and functionality 

improved. Three decades of such work and refinement in the private sector are what have given it an 

unmatched level of detail and reliability difficult to replicate. 

Despite these differences in conception, the results of REMI's work are largely consistent with 

previous studies in terms of finding a benefit to the economy, industry effects, and emissions 

reductions. For exatnple, the May 2013 CBO also stated that a well-designed carbon tax could increase 

economic output, and found a hypothetical $20 per ton carbon tax scenario would result in an 8o/o 

reduction in emission at the national level. If held at that level, REMis model setup would have found 

comparable results. 

Interpreting the Results: Take-home points 

The biggest take-hon1e frotn this study is that there is no econmnic argument against FAD. It 

creates jobs, grows the economy, saves lives, and makes Americans richer. It does this while also taking 

a serious chunk out of C02 emissions, reducing them to 69~/o of 1990 levels by 2025, and SO~Io of 1990 

levels by 2035. 

To be against FAD is not only to be against a stable climate, but it is to be against jobs, against a 

larger economy, and against saving American lives. We know of no politician who wants to be against 

these things, and so we hope that this study will clear the way to rapid passage of FAD.