Sunday, February 19, 2017

Fee and Dividend: A Viable Solution?

In 2015, the U.S. produced “12.7 million barrels of oil …[and] consum[ed] nearly 19.4 million barrels of oil per day” [1].  On a global scale, “the oil industry is one of the most powerful branches in the world economy” where more than “four billion metric tons of oil is produced worldwide annually” [2].  Make no mistake, the oil industry is an absolute juggernaut.  From oil drilling to consumption, the demand for this resource is continually increasing – and given the numbers, one can predict that this supply will be rapidly decreasing. 

Whether it be ExxonMobil or the Dubai Petroleum Company, the lucrative rewards of the oil industry are prevalent.  In relation to the global demand for oil, fields and other producing areas (worldwide!) are continually targeted for drilling – regardless of how controversial they may be (read Exxon’s controversial oil rig:  As journalist Nicole D’Alessandro puts it: “For the oil industry, business comes first” [3].  Oil goliaths, like ExxonMobil, have been notorious for putting profits above everything else.  Given this ideology, the question of changing the oil industry becomes that much more daunting.

So, how do we stop this juggernaut?  Perhaps the question should not be about how to stop them, but how we can better regulate them.  

The fee and dividend act proposed by Dr. James Hansen aims to do just that.  Dr. Hansen proposes that a “’carbon fee with 100% dividend’ [should] [be] required for reversing the growth of atmospheric CO2” [4].  Given this, the fee would also be “applied to oil” [4].  It is touted as: “the most simple method possible to reduce CO2 emissions, mov[ing] us toward renewable sustainable energy and maintaining a functioning economy” [4].  In a nutshell, the proposal looks to hold corporations accountable for the oil (as well as natural gas and coal) they produce.  By adding a fee on oil “at their point of entry into the American Market (such as at an oil well)” will inevitably trigger a “market-driven mechanism” [5].  

The fee will increase over time until “clean energy becomes cheaper to employ over fossil fuels” [6].  The entirety of the fee paid by corporations would then be divided and given as dividends (i.e. payout) to Americans (monthly).  This would work to “offset the higher prices households will pay from rising energy costs induced by the fee” [5].  Essentially, the aim of the proposal is to let the people, not the government, dictate how they want to grow “America’s energy economy” [5].  By doing so, the hope is for Americans to spend their dividend income on “non-fossil fuel energy sources” leading to “entrepreneurship and innovations [of] new industries…renewable and fuel efficiency” [5].  Thus, creating a new stream of jobs for the American public as well. 

For more information, please read the linked websites below.  Although the proposal is currently aimed at the U.S. (and Canada), the bill could be applicable on a global scale, using the same structure.  There are ongoing efforts by advocates to pass this proposal through congress - and thereby changing the energy policy in America.  Grass-root activism has played a major part, where petitions and other forms of activism are made accessible (if interested, please refer to the links down below).  

Is this a viable option?  Realistic? Would it work?  Could this proposal be applied to other countries as well? 

Comment below and let us know what you think!  

Learn More: cap-and-trade-20150306-story.html

[1] Statistics and facts about the U.S. oil and gas industry. (n.d.). Retrieved from

[2] Global oil industry. (n.d.). Retrieved from

[3] D’Alessandro, N. (2014, August 11). Exxon starts ‘most controversial oil rig in the world’. Retrieved from

[4] Fee & 100% dividend. (n.d.). Retrieved from

[5] Cheek, M. (2011, October 21). Oil comes with hidden costs. Retrieved from

[6] Carbon tax vs. fee & dividend. (2015, August 27). Retrieved from

The oil and gas industry in the United States [Online image]. (2014). Retrieved February 19, 2017 from

Carbon fee and dividend [Online image]. (n.d.). Retrieved February 19, 2017 from

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