A Cap on Carbon and a Basic Income: A Defensible Combination in the United States?

The Permanent Fund Dividend (PFD) of the Alaska Permanent Fund (APF) can be seen as a successful example of a universal basic income. It is a partial, not a full, basic income, as it is not sufficient for basic needs. But like other basic income schemes, it is universal and detached from any work requirement. A basic income funded in this way is a natural resource dividend. The natural resource, in this case Alaska’s oil, is owned equally by every resident, and every resident gets an equal share of the returns on wealth generated by the resource. This book asks how this model might be replicated in other contexts, and with other resources. Of the possible resource bases for a basic income at the federal level in the United States, one of the most promising is the atmosphere we all share, which, treated as a common sink, is becoming dangerously polluted with greenhouse gasses (GHGs). Limitation of this pollution through the auction of a fixed number of carbon permits will generate large revenues, and each of us might lay claim to an equal share of these revenues in the form of dividends, an idea popularized by Peter Barnes.1 This is not mere speculation. The American Clean Energy and Security (ACES) Act, which passed the United States House of Representatives in June 2009, initially would give away 85 percent of the permits, but in the 2020s it would begin auctioning an increasing share of the permits and return the revenue to residents on an equal per capita basis.