Recently Senators Maria Cantwell (D-WA) and Susan Collins (R-ME)introduced the CLEAR Act to the US Senate as an alternative to both the Waxman-Markey cap-and-trade bill in the House and the Lieberman-Graham-Kerry Senate bill. It is a unique alternative known as "cap-and-dividend."
The bulk of the plan will go into effect in 2012 when the executive branch would set a cap on the total fossil carbon. It would remain at that level for three years, then shrink each year after that at an increasing rate. The legislation targets companies that produce and import fossil fuels. Permits would be exclusively auctioned off to producers, preventing speculators from driving up prices. Of the revenues taken in by the auction 25% would go into clean energy research and 75% would be redistributed among American citizens on an equal per capita basis.
Here's why you should be behind this bill:
1. It will be popular
2. It is economically progressive
3. The "upstream" cap ensures ALL emissions are capped
4. No handouts are given to historic polluters
1. It will be popular
The CLEAR Act has frequently been compared to the Alaska Permanent Fund (APF), a policy that has proved incredibly popular among Alaskans and which has received praise from groups across the political spectrum. Both the APF and the CLEAR Act take in revenue by regulating natural resources and in turn pay it out on an equal per capita basis (Notably, they are different in that Alaskans receive interest from the APF whereas revenues are immediately divided under the CLEAR Act). What is amazing about the APF is how incredibly popular it is among Alaskans. In 2004 when Alaska was facing a budget shortfall, a poll showed that only one in three Alaskans supported tapping into the fund, whereas 59% said they would support reinstating the personal income tax instead. Considering the unpopularity of taxes in this country it is amazing that Alaskans would support this in order to protect their fund.
There is ample reason to believe that the CLEAR Act would experience similar popularity. Every month every American would receive some money from the government wired straight to their bank account. All else aside, who can dislike that? Furthering its popularity, it already has bipartisan support (and hopefully it could win over more Republicans during debate). And since it's a universal program, everyone has a stake in its success (there's a reason that Social Security is the "third rail" of American politics).
2. It is economically progressive
One of the strongest Liberal criticisms of climate change legislation is that it hurts low-income families the most because they spend the greatest percentage of their income on energy. Any legislation that puts a price on carbon emissions will inherently raise prices on many goods and services, so there needs to be a way to limit the impact on those who are least able to pay for it. The cap-and-dividend system does this by giving back the same amount of money to everyone. While those with low income pay a higher percentage of their income to energy costs, in absolute terms they pay less total. Because of this, most lower and middle class families would actually find themselves with a net gain in income after increased energy costs and the dividends received are both taken into account. According to a recent study, while a $200/ton price on carbon without any rebate would hurt families in the lowest quintile by decreasing their net incomes by around 10%, the same carbon price with dividends paid out would increase their net income by 14.8%. Meanwhile, the wealthiest quintile would find their income decreasing slightly. Hence, those who are most able to pay for it are the ones who would finance America's reduction in carbon emissions.
3. The "upstream" cap ensures ALL emissions are capped
Another criticism of that holds true for many of the current cap-and-trade proposals is that by capping carbon when it's emitted they ignore many emissions sources like automobiles, which are another contributing factor. The "upstream" cap proposed in the CLEAR Act would instead cap the emissions at the point where they come out of the ground or are imported into the US. Not only does this ensure that all emissions are included under the cap, it also reduces the number of companies that need to be regulated. Instead of the tens of thousands of companies across many industries who emit greenhouse gases, the auction is limited to the couple of thousand who extract and import fossil fuels. This will minimize the overhead of running the program and make enforcement more efficient.
4. No handouts are given to historic polluters
Perhaps the loudest criticism that Liberals have been making about the current cap-and-trade proposals is that they reward those companies and industries that have polluted the most in the past and punish those who have already taken steps to reduce emissions by allocating permits based on past emissions. The CLEAR Act has an elegant solution to this. NO FREE PERMITS. Instead of trying to make sure that the economy is not too damaged by the implementation of a climate bill, other proposals want to give proposals away. The CLEAR Act addresses the same concern merely by making sure there are enough permits to go around for the first year. Additionally, they place a maximum and minimum price on auctioned permits. The added benefit of not giving out free permits is that it keeps special interests and industry groups from making sure that they get a better deal than others.
It's these four reasons that the CLEAR Act has earned my respect and support. I hope that this has persuaded some of you as to the merits of this innovate policy solution. Now, what are you waiting for? Call your Senators and Representatives and ask them to hop on board!