Rep. Chris Van Hollen of Maryland introduced a climate bill this week that received little notice, but the formula it provides for capping carbon offers a useful strategy for winning broad public support: Make polluters pay fees for carbon emissions and rebate the revenue to American families.
It is called the The Cap and Dividend Act of 2009, and it is an astonishingly simple piece of legislation – a mere 20 pages long.
The reason this little bill might end up punching above its weight is because it speaks loudly where the 648-page climate bill introduced the day before by Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) remains silent: on the question of carbon credit auctions and allocations.
Van Hollen wants to auction 100% of the permits that companies will need in order to release carbon into the atmosphere – in other words, no free giveaways to polluters, despite their demands.
He also wants to return 100% of the auction revenues equally to every American resident with a social security number. That's the "dividend" in the bill's title – also sometimes referred to as "cash back" or "rebate."
His bill echoes President Obama's thoughts on cap and trade as well. The president wants a program that controls emissions, auctions 100% of the permits and returns most of the revenues to working families. Peter Orszag, the president's budget director, explained succinctly why a 100% auction is necessary:
To give away the permits instead would be "the largest corporate welfare program that has ever been enacted in the history of the United States."
SolveClimate had the luck to bump into New York Congressman Charles Rangel, chairman of the House Ways and Means Committee, as he arrived by train in Washington, D.C., on Monday, and he was gracious enough to answer a few questions about climate legislation as we walked along the platform.
It was the day before President Obama addressed the joint session of Congress, asking for a cap on carbon emissions. When we asked Rangel how his committee would respond to climate law, here's what he said:
Whether it's cap and trade or a carbon tax, we're there.
On the question of where the money from carbon revenues should go, he voiced concern about protecting consumers from rising energy prices that a cap on carbon would bring:
We've got to provide a cushion. No question about it.
Watch the video. It will make you feel like you're walking the platform at Union Station alongside the powerful Congressman as he pulls his own bag behind him. Unfortunately, we ran out of platform and the drive-by interview was over, but he gave us a peek into his intentions for influencing the shape and scope of climate law.
At issue is hundreds of billions of dollars of new revenues, so it should be no surprise that Rangel has his antenna up as chairman of Ways and Means -- that's why he said, "We're there." Since then, he has announced that his committee would be marking up a climate bill of its own before Memorial Day.
Peter Barnes, senior fellow at the Tomales Bay Institute, has been the tireless champion of the "cap and dividend" approach to national climate legislation, an idea he first proposed ten years ago in a book called Who Owns the Sky? Now, his idea is finally gaining traction in the nation's capital as the new administration fast-tracks climate action as a policy priority.
The cap and dividend idea is arguably the most elegant, simple and equitable variation of the "cap and trade" mechanisms currently under consideration. In the current economic crisis, it also now seems to be the most politically plausible. Here's why.
Cap and dividend makes every American an equal owner of the sky. Under this plan, when the government caps emissions and sells permits to polluters to release carbon dioxide, it collects the funds on behalf of American citizens. Each month, the government sends everybody a dividend check from the proceeds and thereby protects families from rising energy prices.
We caught up with Peter Barnes who spoke to us in detail on camera about this idea. He was joined by Michael Noble of Fresh Energy, who sees cap and dividend as the best idea for squeezing carbon out of the economy without squeezing family finances. As Barnes asks, what politician is not going to want deliver a monthly check to each and every constituent back home? Not only that, as you will see, cap and dividend promises to deliver what President Obama promised on the campaign trail.
A bit of background is important to keep in mind. Barnes' formulation of cap and dividend is part of a larger body of thought, spelled out in another book he wrote called Capitalism 3.0: A Guide to Reclaiming the Commons. In it, he analyzes how capitalism has overtaken democracy and suggests with great persuasion that the path to correcting the imbalance is by protecting and strengthening a sector we usualy ignore -- the commons. The atmosphere is the commons under consideration in Barnes's cap and dividend proposal, a subset of a vision he has developed for a new operating system to better drive capitalism. His formula: Corporations + Commons = Capitalism 3.0.
Barnes writes with the clarity of a former journalist and from the bedrock of success he has enjoyed as a businessman. He also brings a keen and prescient eye to history and political opportunity:
A few days before the election, Barack Obama told Time magazine's Joe Klein:
"Finding the new driver of our economy is going to be critical. There's no better driver that pervades all aspects of our economy than a new energy economy ... That's going to be my No. 1 priority when I get into office."
That's exactly the right choice for numerous economic, geopolitical and ecological reasons. By spawning "a new energy economy," Obama can create millions of new jobs, decrease our dependence on foreign oil and avert catastrophic climate change. But the politics of launching that new energy economy -- even with enlarged majorities in Congress -- remains challenging.
In facing this challenge, Obama will be constrained both by a gargantuan budget deficit and his campaign vow not to raise taxes on anyone earning under $250,000 a year. And because of the recession, he can't suck buying power out of the economy. On the contrary, he needs to stimulate spending by consumers.
He also faces a tight international timetable: in December 2009, the nations of the world will assemble in Copenhagen to negotiate a successor to the Kyoto Protocol. If Obama is to have any credibility in those negotiations, he must pass significant legislation before then.
