Cap & Dividend: A Clear Winner

Senator Maria Cantwell (D-WA) introduced a bill today that is a much
better approach to reducing climate change than the cap and trade bill
circulating in the Senate. Her bill, which she co-sponsored with
Senator Susan Collins (R-ME), uses cap and dividend to reduce climate emissions and avoids the pitfalls and boom-and-bust cycles inherent in carbon trading. (Peter Barnes proposed this idea in YES! Magazine in 2001).

Why is this a better idea?

First, polluters would pay for the right to pollute; they would buy
carbon emissions permits at an auction, instead of getting the majority
of them for free. This sends the right market signal-emit carbon, and
you'll have to pay.

Carbon permits would be required at the point where fossil fuel
energy enters the economy. The number of greenhouse gas emissions
allowances is reduced regularly by amounts that businesses can plan
for. There are no offsets-these would be real reductions in climate
changing emissions.

Second, American families strained by the poor economy would
benefit. Each person would get an equal share of the proceeds from the
auction. It works like the oil trust funds in Alaska, where each
resident gets about $1,300 per year for their share of the state's oil
royalties. As long as our economy remains dependent on fossil fuels,
prices for energy and energy-intensive products will rise. But the
rebate will offset those price increases-Cantwell says it will mean
most families are in about the same place financially. Those who buy
carbon-free energy, drive energy efficient cars, or buy products
produced locally with little fossil fuels will come out ahead, though,
while those who drive gas guzzlers will pay more through the higher
price of fuel. So it sends the right signal to consumers, too.

Politically, it should go over much better than cap and trade.
Who wouldn't like to get a check in the mail each month that represents
your share of the carbon auction revenues? Three quarters of the
revenues would be distributed equally to all Americans. The other
quarter will go to clean energy research
and development, for projects that reduce non-CO2 greenhouse gas
emissions, and for aid to communities and workers who need special help
making the transition to a clean energy economy.

And here's the frosting on the cake. Instead of cap and trade, which
would set up a massive Wall Street system of buying and selling carbon,
this auction is for energy producers and importers, only-not brokers
and speculators.

What's not to like? This is a far better proposal than the cap and
trade proposals that has Wall Street salivating. One caveat, though.
Carbon reductions proposed in the bill are probably not enough to avert dangerous climate change.
But if there is flexibility to step up the reductions as the science
get firmer and the public backing grows, this approach could be just
right.