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Cap-and-dividend free-for-all

By Juliet Eilperin

Since Saturday's Post story on the new climate proposal brewing in the Senate, a new debate has emerged on whether a cap-and-dividend policy makes sense.

The cap-and-dividend strategy allows the federal government to set an overall limit on greenhouse gas emissions and refund the money to taxpayers to offset higher energy costs.

Climate Progress's Joe Romm wrote a blog post on why this is a bad idea.

Cap and dividend as currently constructed is neither politically nor environmentally viable, as I've noted. The only reason that isn't obvious to everyone is that few big players in the debate took it seriously enough to look closely at it until recently.

But Peter Barnes, one of the best-known proponents of cap-and-dividend, wrote this reply to Romm:

You keep perpetuating the myth that cap and dividend would take money from "mom in the Midwest and dividend it to Paris Hilton." Where are your numbers to prove that? The studies I've seen show that to be a big fat fib, perpetrated by the very companies you approvingly quote.

The best analysis of state-by-state costs and benefits from cap-and-dividend is this one by James Boyce and Matt Riddle.

... It shows that Paris Hiltons in all 50 states -- that is, people with high-polluting life styles -- would lose money under cap-and-dividend, while working moms and dads with average and low-polluting life styles would come out ahead IN ALL 50 STATES. Nationwide, over three-quarters of Americans would gain, while only the most polluting households would lose (as they should). In other words, wealth redistribution under cap-and-dividend is from high-polluting households such as Paris Hilton's to everyone else in every state. If you've got numbers that show otherwise, let's see them.

Of course, companies will always claim they can't pass through 100% of their higher carbon costs to consumers. Pity them! In some cases they may only be able to pass through 90%. If so, that might just spur them to invest in conservation and efficiency. Why, then, should government bend over backwards -- that is, take money from middle-class families -- not merely to hold these companies harmless, but to reward them with extra profits?

By contrast, there's NO WAY ordinary families can pass through their higher carbon costs -- not even 10 percent of them. There's no one else to pass them TO. Ordinary families are the people higher carbon prices really hurt. That's why cap-and-dividend protects THEM, rather than polluting companies.

The reason the CEO of American Electric Power dislikes cap-and-dividend -- as you surely know -- is not because it sends money to Paris Hilton, but because it provides no free allocations to his company. If you're going to quote the fellow, at least remind your readers of his economic self-interest.

Finally, I find it distressing that you would use this utility propagated-lie to dismiss what may be our last chance to establish an economy-wide price on carbon. If cap-and-trade is politically dead, why not try some version of cap-and-dividend? You might be surprised at the support it would get if enviros stopped echoing powerful polluters and stood up for middle-class families.

If Sens. John Kerry (D-Mass.), Lindsey O. Graham (R-S.C.) and Joseph I. Lieberman (I-Conn.) include this policy in their draft climate package, there will be plenty more debate in the weeks to come.


Juliet Eilperin

 |  February 27, 2010; 10:07 PM ET Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati  
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Vermont environmentalists voted to close the state's nuclear power plant:

Vermont gets some hydroelectric power from Canada but environmentalists have blocked construction of new hydroelectric power in Canada too.

The world gets 1.5 percent of its electricity from windmills and electricity does not power most of the transport and heating uses fueled by fossil fuels. It is silly to expect environmentalists will leave us with as much as a loaf of bread if they get all their bills passed.

Posted by: rainsong | March 1, 2010 6:57 PM
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If the govt. taxes carbon used in steel making, domestic steel has to pass on the tax to customers. The government is not efficient as they cannot see that this will cause more steel to be made abroad and shut down US jobs. Industry after industry is at risk. The government promises dividends, but it causes private sector job losses, while finding ways to increase taxes and grow itself. The government cannot control its own spending, but has a deficit of nearly 10 percent of GDP fueling a potential debt crisis. The government cannot control climate either. The nations did not want any sort of binding carbon accords. The government cannot legislate ice age - interglacial warming cycles. Taxing carbon domestically gives more business to India and China as their products do not have taxes factored in. More job losses. Printing more money will not improve low test scores in the public schools or provide cheap electricity to the people. Power to the people.

Posted by: rainsong | March 1, 2010 9:13 AM
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Cap and trade, cap and dividend, cap and trade. Why doesnt the Post report the real story - that the global warming hystery is being proven every day to have been a fraud from the beginning. Maybe our Senators aren't aware of what's going on because they only read the Post. The UK media if full of news...for some perspective, try:

Posted by: silencedogoodreturns | February 28, 2010 1:03 PM
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