New Proposed Climate Change Bill in Washington Is Simpler and More Equitable
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Politically, a direct universal refund could generate the popular support for a greenhouse-gas reduction bill that has been so conspicuously lacking to date. One reason for the tepid support is that Americans know that when you put a price on carbon you will raise prices on all products.
Waxman-Markey tries to minimize price increases by giving polluters a huge number of free carbon allowances and directing them to use these to limit price hikes. In a May memorandum, Rep. Henry Waxman, D-Calif., and Rep. Ed Markey, D-Mass., called the three largest categories of allowances: "Protection from Electricity Price Increases," "Protection from Home Heating Oil Increases" and "Protection from Natural Gas Price Increases."
One could say that Waxman-Markey has given polluters about 75 percent of the carbon allowances in the expectation that they would use these to restrain price increases. It is a messy and largely unmonitorable process. The public is understandably skeptical.
Cantwell on the other hand, accepts that putting a value on carbon will increase prices. She doesn't need to dissemble to the American people on that important point.
Her bill holds the majority of U.S. households harmless by giving all households 75 percent of the money raised by the carbon auction. Such a strategy is not only much simpler, it might generate an additional carbon reduction through changes in personal behavior since the less carbon an individual household uses the greater its net income from the refund.
A universal refund strategy has still another advantage: It promises to maintain popular support even if carbon prices rise significantly, because as the price of carbon increases, the carbon refund will grow commensurately.
Private vs. Common Ownership
A universal refund reflects a fundamentally different philosophical approach to pollution than Waxman-Markey. By putting a value on carbon, the Cantwell and Waxman-Markey bills put a value on the carbon-absorptive capacity of the sky. The question then is, who owns that suddenly valuable capacity? Or as the title of the path-breaking book by Peter Barnes asks, Who Owns the Sky?
Barnes persuasively argues that we all do, equally. By giving companies essentially free pollution rights, Waxman-Markey, in essence, says that polluters own the sky. By requiring polluters to pay for pollution rights and returning 75 percent of that revenue directly to all on an equal per capita basis, CLEAR says that we all own the sky. The sky is a commons. A discussion about the role of the commons may be one of the most significant outcomes of CLEAR. (For more discussion see onthecommons.org.)
One other feature favorably distinguishes the Cantwell bill from Waxman-Markey that deserves mention. CLEAR does not ban EPA from regulating greenhouse-gas emissions. Waxman-Markey does. Why would we want to strip the executive branch of its ability to regulate greenhouse gases at this historic moment?
CLEAR has yet to be introduced. Cantwell has circulated it for comment and reportedly has gotten push-back from a number of environmental organizations. Some oppose it simply because it may delay a vote on Waxman-Markey in the Senate. They appear willing to support any climate bill, not matter how bad.
Others offer more substantive and valid criticisms.
One is that Cantwell's bill requires far less greenhouse-gas reductions in the early years than Waxman-Markey. Waxman-Markey requires a 17 percent reduction from a 2005 baseline. CLEAR requires a 1.5 percent reduction from a 2012 baseline by 2020. Cantwell should increase the required reductions.
However, the spread between CLEAR and Waxman-Markey's effective carbon reductions might not be as wide as the numbers suggest. Some reports estimate that the combination of free allowances and offsets in Waxman-Markey could limit domestic carbon reductions to as little as 2 percent by 2020.