Why would you want to shield consumers from price increases in fossil fuels? Isn making fuel expensive the best way to change consumer behavior?
True, you don’t want to overdo it and totally negate the price signal. However, the main reason to provide some consumer compensation is that an increase in the price of fuel is regressive, meaning that it impacts poor people more than rich people. Although fuel price increases will have positive environmental effects, we suggest social policy to make the impacts more fair. You also want a slowly increasing price signal, and to avoid price spikes, insecurity, causing a recession, and backlash. A per capita rebate, such as Carbon Share, would alleviate some, but not all, of the impact. High carbon emitters would still pay more. Also the rebate helps preserve short-term political support for the long-term emissions cap.
