An economic solution

Carbon fee and Dividend. (link)

This proposal is not mine. I believe it originated with Citizens Climate Lobby and championed by Bruce Hyer, with additions by Cathy Orlando. However, I am not sure that their proposal goes far enough.

Carbon fee and dividend is a direct fee on carbon pollution on fossil fuels at their point of entry into the economy with 100% of the dividends returned back to citizens

The basic proposed structure is:
1. A fee is charged at the point of origin or point of import on greenhouse gas emitting energy (e.g. oil, natural gas and coal), based upon scientific data as to its likelihood to produce CO2 pollution.

2. The fee is high, and is progressively increased.

3. The fee goes into a trust fund, and is returned straight to citizens/households by CRA equitably (on an equal per capita basis) and in full. None goes to government!
Cathy Orlando

Much more detailed layout here.

The issue I have with this is that the changes we need to our logistics infrastructure are more substantial than what this will fund.

I feel that we have achieved the current capacity by building an infrastructure around cheap energy extracted from fossil fuels. As such, to transform into a different society with the current situation of the baby boomers, US debt levels etc, is a tall ask. Not saying it is impossible, but given the circumstances, I would say it will be very unpleasant for many.

From Wikipedia, some sobering statistics;

• Retail stores, hospitals, gas stations, garbage disposal, construction sites, banks, and even a clean water supply depends entirely upon trucks to distribute vital cargo. Even before a product reaches store shelves, the raw materials and other stages of production materials that go into manufacturing any given product are moved by trucks.
• By 2011, trucking moved $603.9 billion in freight – more than 80 percent of all freight transportation revenue
• Agricultural products totaling $118,832,000, or 82.7 percent, were shipped by truck in 2007 (excluding animal feed, cereal grains, and forage products). About half of that agricultural freight was shipped by for-hire trucks and half by private trucks. More than 92 percent of prepared foods, including dairy products and prepared fruit, vegetable, and nut products, were moved by truck in 2007.
• Within the health care industry, trucking moved $501,445,000 worth, or 65 percent of the total value, of pharmaceutical products in 2007.
• Lumber and other wood products totaling $168,913,000 were shipped by truck in 2007, accounting for 91.9 percent of this class of product.
• Over 80 percent of all communities in the US rely exclusively on trucks to deliver all of their fuel, clothing, medicine, and other consumer goods. 

Get ready for inflation to bite hard, and not just with food. This will lead to deflation of asset prices, and an escalation of US debt.

"Why does logistics have to be central to the argument?" Because western society is living on the edge as it is. Why is the US so obsessed with growth, to the point of going to war over it? Because if they don't grow their unfunded liabilities, and the replacement of the US dollar as the world currency, will result in a depression that will make the 30s look like a Mardi Gras.

The people in power are fully aware that we are reliant, for over 1/2 our oil supplies, from Middle East suppliers. The oil supplies are dwindling and the political environment becoming more unstable. Most people would be unaware that countries are only required to hold 90 days worth of fuel. In a crisis that fuel is rationed according to a preset hierarchy. Logistics is not even on the list. For anybody who doesn't understand the scope of the problem please see this post. 

Anything that would create an additional burden on GDP, without radically changing the way we consume, will be unacceptable. That is why the best they can do will be to attempt to change things over time. However, time is not on our side.
The type of structural reforms required to replace our reliance on logistics would be a complete remodeling of our society. I am not justifying a continuing of the status quo, I am just trying to be realistic. There is no way to support the cities we currently have without logistics, something's going to give.

Looking at the trucking industry again. We would need to replace or update thousands of vehicles. Who is going to pay? The driver? The ones in Australia are barely making ends meet. The problem is actually larger than that. We need to move freight onto an electric freight network with primary line-haul performed by trains. While converting a track system from diesel to electric would be feasible, the problem is that;

1. We do not have the power source, 
2. and the current track system (particularly in the US) is not extensive enough.

We cannot expect to changeover our infrastructure by charging the logistics companies more to move our freight. Otherwise they will simply pass on the cost of the carbon fee, serious inflation will result and there will be no infrastructure changes. There has to be scope to finance the governments ability to provide a rail system. This is a community need, not something that should be left to corporations. 

Extending the proposal

I would suggest that this be extended in the following manner. It would be more equitable if the distribution of the dividend was on the inverse of the amount of consumption (sales) tax paid by a tax payer. That is, the more they consumed, the more they were responsible for emissions. The system could be simplified by the use of the consumption tax bell curve. Divide it into quarters. Much like tax brackets. 


An example of the distribution might be as follows;
Households who consumed the highest amounts Q4 would receive 0 dividend. 
Q3 would receive .5 dividend. 
Q2 would receive 1. 
Q1 would receive 2.5


Initially the bell curve is not even. Given current western consumption it is negatively skewed (leans to the right). That means a lot of households would receive no dividend.
Over time the bell curve would skew to the left.
The effect of this would be important. The early adopters of minimal consumption would be very well rewarded. A few would be receiving 62.5% of the dividend. There would be a powerful incentive for the curve to drift to the left.

It would create a system that actively rewarded those who minimized their consumption. That in turn would lead to innovation, as there would be a financial reward for reducing consumption. People would pay for products that reduced their consumption with the expectation of dividends from the system. It would also help provide a safety net for the elderly.

Whether an income is high or low should not be a factor. Low consumption is rewarded. High consumption is penalized (through the carbon fee). The effect would be to dramatically swing the way we consume as a society. People would be paid to grow their own food.

Prior to the distribution of the dividend, a logistics trust fund would receive a tax on the total. It's mandate would be the modernization of the logistics system and the possible funding of Community Farming Centers.