Upgrading California’s Climate Policy – How SB775 could make carbon pricing more equitable

Carbon cost, dividend, and net benefit (or cost) under SB775 per capita for 2021, assuming a carbon price of $25/tCO2 and 90% of revenue returned as a Climate Dividend, averaged for all households and by household income groups from lowest to highest quintile.
Californians for a Carbon Tax (CalFACT) commissioned a study on the economic impact on California households of Senate Bill 775 which would upgrade cap and trade by creating a steadily rising carbon price with the majority of revenues rebated to California resident as a Climate Dividend.

The study, “Upgrading California’s Climate Policy – How SB775 could make carbon pricing more equitable”, by Max Henrion, PhD and Tony Sirna, explores the economic effects of the carbon price and dividend and compares them to an extension of current cap and trade policy.

A key finding is that SB775 would make cap and trade a progressive fiscal policy, with a majority of low- and middle-income households ending up with a net financial benefit under the program. In contrast, an extension of the current cap and trade would be a regressive policy with low- and middle-income households costs increasing from the carbon price by a larger percentage of income than high-income households.

Read the full study: Upgrading California’s Climate Policy – How SB775 could make carbon pricing more equitable