Carbon Tax and Dividend as a Stepping Stone to radically universal variant of UBI

Tim Reutemann
4 min readJan 4, 2019



Poorer population segments consume spend proportionally more of their income on it. Therefore, carbon taxes are inherently regressive (see Yellow Vest Protest), unless the carbon tax is reimbursed directly to the population on an even per capita basis as a dividend. The infrastructure required to pay such dividends can also support a UBI (Liquid Reign, chapter 11).

Few national Governments have the required infrastructure to directly and automatically transfer cash to every resident. So the first step to a carbon tax and dividend scheme is to create the technical possibility to implement it. This article describes the minimal viable product for a globally scaleable dividend technology.

Spoiler Alert: It works best if you focus on making it easy for refugees to sign up. If they can find a way, everybody can.

Problem Framing

I will ignore problems of political will and corruption for now and focus on the technicalities. The goal is to outline a minimal viable product that can be used out-of-the-box by the UNFCCC or UNHCR.


I need to fix this picture, “resident” to be replaced by individual human body

Client Perspective: Tax collection can happen in traditional currency and should be applied at import and extraction points of fossil carbon. Instead of going into regular government budgets, the tax is collected by a separate and independent institution with the mandate to use 100% of it to guarantee a purchase price for all tokens spawned. This guarantees the minimum value of tokens.

Tokens spawn at an even rate in, e.g. one token every hour. The tokens can be fully fungible and the wallets can be signed as belonging to residents of a specific jurisdiction. The pilot jurisdiction can be e.g. a refugee camp in a climate-vulnerable area.

Once the technology works there, it is easy for national governments to replicate this with their own citizens databases to e.g. pay an extra divident to residents in the coal mining areas. It has to be open-source, yet come with simple instalation packages.

Account Creation in the UBI platform

The UBI faces a trade off between ensuring universality among humans and preventing attacks from people who want to gain more than one UBI. It should be very easy to sign up for the first account, and very difficult to sign up for another.

To operate in a refugee camp type situation, Wallets UI needs to maximize user autonomy (private keys held by the end user by default), yet allow service providers (kiosks, banks, post offices etc.) to offer key-handling services to parts of the population less comfortable with the responsibility of managing their own private keys. It has to run on old android phones.

Sybil Protection: In the refugee-camp, we can affort in-person turing tests, including touch and smell contact between human bodies. The initial seed of trust in humanity are UN workers, but every person in the trust network can confirm humanity of five other people.

The social graph is recorded, and if a bot is found, all the node who approved the bot has to do another re:captcha.

P.S. Anticipated Problems without radical universality

Border Adjustments

The carbon tax would apply at the point of import / extraction of fossil fuels. Accordingly, domestic high-carbon industries (e.g. Metals & Cement) producing internationally traded commodities will become less competitive. While reducing total metal and cement production is an explicit goal of a carbon tax, border adjustments to fossil-carbon-intensive products might be required to avoid simple circumvention of the tax by relocating industries outside the jurisdiction of the tax authority.

High Carbon Bioenergy

A high tax on fossil carbon can induce an increase in the use of agriculturally produced energy products. This is highly problematic as those products compete with food and drive deforestation, unless derived from waste. The sector must be carefully observed and taxed to avoid carbon leakage.


A classic issue of fuel tax differentials between countries is cross-border tank-filling travel. This can be observed at any border with even minor differences in fuel tax in Europe and poses a threat to scaleability. If the carbon fee goes very high, the area covered needs to increase (e.g. from Estonia to EU).

Undocumented residents

This problem is not solveable in the cloud — As the initial jurisdiction is expected to be small, it is not feasible to just accept any human being for an ID wallet based on some decentral turing impossible proof type of system. Instead it will rely on existing jurisdictional identification technology like residence permits and ID cards. This problem is only solvable by giving every resident some form of permit or registration number.

Resistance by the Dragon Necromancers

There are plenty of very powerful interests willing to fight tooth-and-nail against any meaningful action on climate change. I like to call them dragon necromancers, because they derive power from raiding dinosaur graves and are acting fantasy-cartoonish evil by now. Further resistence is to be expected from traditional high finance, which already made it very difficult for progressive nations to issue money-like tokens.



Tim Reutemann

#LiquidReign is out! #liquiddemocracy #esports #latestagecapitalism #anarchism #mixedreality