Hosted by CPLC in collaboration with the International Climate Dividends Alliance (ICDA)

ICDA Partners: Citizens’ Climate and Cleantech 21

With the support of Switzerland

Carbon Pricing Instruments (CPIs) can have positive and negative socio-economic impacts on societies. The overall cost or benefit of those impacts, along with how they are distributed, can be influenced by four main areas of impact: 1) Direct impacts from increased costs, 2) Impacts of revenue recycling, 3) Broader economic impacts, and 4) Environmental effects.

Meanwhile, the need to significantly enhance Nationally Determined Contributions (national climate action plans) is both a Paris Agreement mandate for next year’s COP26 negotiations and a geophysical and eco-economic imperative. The cost of not achieving climate resilience now far outweighs the challenge of acting. What is needed are well-designed policies that do well at the planetary, macroeconomic, and human scales.

This workshop will include a review of the CPLC Executive Brief on “Distributional impacts of carbon pricing on households”, which examines evidence about distributional impacts and provides guidance about how to avoid negative impacts on economically vulnerable people. It will also include a review of Climate Dividend Frameworks (CDFs), a category of carbon pricing that is specifically designed to optimize the distributional impacts in all four areas listed above to achieve positive outcomes for the environment, for people, and for the economy as a whole.

A CDF assesses an upstream fee on carbon-emitting fuels and returns revenues to households. It can complement or take the place of other carbon pricing measures and focus on rapid decarbonization through the internalization of negative externalities, while expanding incomes for most households.

This workshop will include five general segments:

1. Review of Distributional Impacts Brief

2. Review of Climate Dividend Frameworks

3. Panel discussion

4. Interactive discussion

5. Review of emerging ideas and follow-up

In-depth insights to be explored in technical and political detail:

1. Potential speed of implementation and political acceptance

2. Suitability for developed and developing countries (also vis a vis other pricing policies, such as national carbon markets)

3. Administrative effort and smart process approaches of fee collection and redistribution

4. Considerations relating to international linking, incl. border adjustments

5. Just Transition and broader sustainability considerations

The International Climate Dividends Alliance (ICDA) is co-managed by two CPLC partners: Citizens’ Climate Lobby and Cleantech 21. It has support from the government of Switzerland, another CPLC partner. It exists to create a space for convening, analysis, and technical capacity development regarding CDFs.

Citizens’ Climate and Cleantech 21, as co-managing partners in the Climate Dividends Alliance, will be compiling, processing, curating, and sharing new emerging insights from this workshop (without attribution), to share with participants.