The Find: A bill soon to be introduced in Congress offers a bold proposal: pay every American a dividend from the profits from selling carbon emission permits.- The Source: A post by Ben Jervey on GOOD Magazine’s The New Ideal blog.
The Takeaway: President Obama’s budget calls for a cap and trade scheme to cut the emissions of greenhouse gases and tackle global warming. The basic idea is simple: set a ceiling for emissions, allocate permits and create a system that allows emitters to buy and sell these permits so the market sets the price of carbon. It’s an intriguing idea, but one that would almost certainly raise the price of energy for everyone from low income families to owners of luxury yachts. Now there’s another market-based approach to tackling the issue – pay the profits raised from the sale of the permits back to the American people directly. A bill outlining this type of scheme, known as ‘cap-and-dividend,’ will be introduced by Rep. Chris Van Hollen (D-MD) this week. It proposes that,
All (or most) of the revenue raised from carbon permit auctions would go back, in equal shares, to the American people…. like the Alaskan Permanent Fund, which sends everyone in the state a check each year for their share of oil revenue. Higher energy costs, then, would be offset by monthly or quarterly direct deposits into the bank accounts of anyone with a social security number. Because everyone gets an equal share, it becomes a progressive system that best benefits the lower-income families who’d potentially suffer the most from rising energy prices. The paybacks would more than make up the difference for a poor family with smaller energy demands, but it wouldn’t cover the increased costs for the millionaire with two 4,000 square foot houses and a private jet.
Research shows that 60 percent of American families would come out ahead under the proposal, but questions remain, including whether revenue generated by such a system would be better spent investing in R&D and green infrastructure. Nonetheless, it’s an idea worth pondering.
The Question: Is a cap-and-dividend scheme the best alternative?
(Image of smokestack by Senor Codo, CC 2.0)
