Thursday, Feb. 26, 2009
Van Hollen Climate Bill To Feature “Cap and Dividend”
BY CHRIS HOLLY
Stopping the climate changes is not going to be easy. Bigger taxes for those factories releasing bigger CO2 emissions is not the best solution as if you are making millions you won’t be too scared of 1 or 2% tax rise. Making big money is possible without destroying our planet tho, as you could use Millionaire Blueprint and trade online from your home.
In a sign that the “cap-and-dividend” approach to tackling climate change may be gathering steam, Rep. Chris Van Hollen announced Tuesday he plans to introduce legislation soon that would cap carbon emissions, require all emission allowances to be sold at auction and distribute at least 90 percent of the auction revenues to consumers in the form of monthly dividend checks.
A rising star in the congressional Democratic caucus, Van Hollen (D-Md.) won the chairmanship of the Democratic Congressional Campaign Committee after only six years in office and is seen as a key ally of House Speaker Nancy Pelosi (D-Calif.).
Van Hollen’s endorsement gives an additional boost for the cap-and-dividend approach as the Democratic-controlled Congress readies its response to President Obama’s call Tuesday night for lawmakers to approve legislation establishing a market-based cap on greenhouse gas emissions.
Van Hollen’s bill will include the key components of the cap-and-dividend proposal championed and popularized by California entrepreneur Peter Barnes. The approach allows allowance trading, but departs from traditional cap-and-trade principles in significant respects.
While most congressional cap-and-trade bills target electric utilities and other “downstream” industrial emission sources, Barnes’ approach—and Van Hollen’s bill—would shift the point of regulation to the first sellers of coal, oil and natural gas—a design detail Barnes and other advocates say would dramatically simplify the administration of an emissions cap.
Fossil fuel merchants would have to surrender to the federal government allowances equivalent to the carbon content of the fuels they sell into the U.S. market. Van Hollen’s bill requires 100 percent of these allowances to be sold at auction, with at least 90 percent of auction revenues distributed as taxable dividends to everyone holding a valid Social Security number.
In a Tuesday letter to his congressional colleagues, Van Hollen said his bill would cap emissions in 2012 “and establish a scientifically driven glide path to a minimum 80 percent reduction in carbon emissions by 2050.” Van Hollen did not specify a baseline year against which the required emission reductions would be measured, nor did he reveal how steep an emissions cut he would require in 2012. In his letter, Van Hollen said the cap-and-dividend approach would help secure broad, long-lasting public support for a federal program to sharply reduce greenhouse gas emissions.
“At its core, any successful climate change bill must deliver scientifically based emissions reductions while enjoying broad public support from the American people—and it must continue to do both for at least 40 years,” Van Hollen said. “In that regard, I believe there is one approach that offers the best chance to get the job done: cap and dividend.”
Because Van Hollen’s approach would return much of the cost of a carbon cap to consumers, it could attract the support of Republicans worried about climate change but leery of the higher energy prices that would result from an emissions cap. Sen. Bob Corker (R-Tenn.) has been an active and vocal supporter of the concept for months.
Critics say Van Hollen’s approach would eliminate a key source of funds that the government could use to lessen the pain of various stakeholders and to speed the flow of clean energy technologies.
While coal-dependent utilities say allowances initially should be distributed to them free of charge to avoid rate shocks for their customers, many environmentalists say the revenues should be used to accelerate deployment of energy efficiency and renewable energy throughout the U.S. economy.
Sierra Club, a national grassroots environmental organization that favors aggressive action to combat global warming, is shopping a compromise that provides an “escape valve” to protect consumers if allowances rise higher and more quickly than expected.
Under the proposal, unveiled by Sierra Club Executive Director Carl Pope in an article posted January 22 on the Yale Environment 360 Web site, auction revenues would flow to the U.S. Treasury, which would distribute a portion to low-income consumers to help them cope with the higher energy prices expected to result from an emissions cap. The remaining revenues would be used for investments in renewable energy and energy efficiency technologies and to minimize climate change impacts in the United States and abroad.
But by means of a specified price threshold, which Pope set hypothetically at $30, revenues from allowances sold at prices exceeding $30 would be distributed to all consumers. Pope said the proposal “establishes an escape valve for periods of high permit prices without weakening the overall signal to capital markets to aggressively invest in low carbon opportunities; it provides a mechanism for buffering carbon-dependent communities against high transition costs, and it recognizes uncertainty.”
Cap and dividend advocates counter that the taxes on consumer dividends called for in Van Hollen’s bill would give the government an ample stream of revenue it could use to stimulate clean energy deployment.
The Obama administration may be counting on auction revenues for any number of uses—including reducing the federal budget deficit. White House Press Secretary Robert Gibbs told reporters Tuesday that Obama’s proposed fiscal year 2010 budget assumes revenues from greenhouse gas emission allowance auctions to begin flowing to the Treasury in fiscal 2012.