Markey climate bill is best yet

Lieberman-Warner is dead; long live — what? While the ideal climate bill has yet to be written, Massachusetts Rep. Ed Markey has introduced a good one: the Investing in Climate Action and Protection Act, or iCAP.

Markey’s bill makes two big improvements over previous ones: (1) it auctions nearly 100% of carbon permits; and (2) it returns over half the auction revenue to households to offset higher energy prices. By contrast, Lieberman-Warner would have auctioned only half the permits and returned less than 25% of auction revenue to households.

Hearings on Markey’s bill will be held in a few weeks. While it’s unlikely to be voted on this year, it moves the debate forward in a positive way.

Markey’s plan would cover 87 percent of U.S. greenhouse gas emissions. Its stated goal is to reduce covered emissions 20 percent by 2020 and 85 percent by 2050.

After auctioning permits, the bill would return about 55% of the proceeds to low- and middle-income households through rebates and tax credits. On average, this will offset the cap-caused price rises for households earning under $70,000.

The remaining auction proceeds would fund clean energy technology research, payments to farmers and foresters to store carbon in soils and forests, green job training, adaptation aid to developing countries, and climate change education.

One weakness of the bill is that it allows US companies to meet 30% of their permit requirements with domestic and international offsets. This means the bill could achieve actual emission reductions that are considerably lower than its stated goals. This is what has happened in Europe, where despite a cap-and-trade program, carbon emissions have actually risen while billions of Euros have been paid to China for offsets of questionable value.