Cap-and-Trade v. Cap-and-Dividend: Why We Can’t Afford to Pass a Bill that Could Make Matters Worse

Now that the Obama administration has passed its monumental health bill, it is now turning its sights on our energy future. Most people by now have at least heard of cap-and-trade, a system where carbon emissions are capped and those industries that want to emit beyond the cap must have a permit, at which point they can trade with other companies with excess permits that have not yet reached the cap. Last year, the U.S. House of Representative finally passed a climate change bill, one that supports the cap-and-trade system. The bill, known as the American Clean Energy and Security Act, or ACESA (also known as the Waxman-Markey bill), has suffered much resistance by most rank-and-file Republicans in Congress, as well as free-market think tanks and even many average Americans. But here is a little known fact: the bill is also abhorred by several environmental and progressive political groups, including Friends of the Earth and Greenpeace. Here are the main reasons why: the House bill sets caps too low and permit prices too cheap (and actually, would give a bunch of those permits away, leaving the pundits to call it, more correctly: “cap-and-giveaway”) Basically, the emissions cuts the bill strives for would not even put a dent in those we would really need to achieve to avert catastrophic climate change. In fact, the free permits threaten to incite an emitting scenario where we could even experience an increase in our carbon output.


If climate change could be compared cancer, then the House bill could be considered a placebo used in place of the aggressive chemotherapy needed to truly combat the disease. Or worse yet, it might even be compared to ignoring the disease altogether in favor of smoking, drinking and intentionally ingesting carcinogenic chemicals. This is because the bill is also gorged with subsidies and other incentives for research and implementation of dubious “clean” energy methods, most notably something called “clean coal.” To clarify, clean coal currently does not exist and its future existence is an uncertainty. Also, “clean coal” does not mean clean in the sense that the name suggests. It doesn’t mean we get to scrub the soot and its implicit carbon out to wind up with lumps of coal as white as cotton balls, that when burned simply exhale some kind of benign steam. No, “clean coal,” usually refers to something known as “carbon capture and sequestration,” or “CCS.” This means we plan to take all that bad stuff and bury it, or inject it somewhere else. Usually this will be underground, in the mountains, and under our ocean floor, where it is then left to mess with our tectonic plates, soil, and aquatic life in ways that only our geologists, agronomists, and marine biologists can (and already have) made guesses about. Those guesses are scary, such as the extinction of all of our shellfish and more earthquakes.

Clean coal is simply a pipe dream that has yet to be proven to be realistic, and for which such proof is decades away. Too bad we only have a few years to figure out this climate change thing, and too bad that most respectable climatologists have determined that any feasible climate action plan would need to include an immediate phase-out of commercial-scale coal plants to be effective. If you had Stage 3 cancer, would you spend your money on investing in research for theoretical treatment for your disease, one that science suggests could even accelerate the disease, or would you use what you know has been proven to work while your time is short? Clean coal is a multi-billion dollar placebo treatment intended to let industries believe they are combating climate change, while still blowing the heads off mountains to get at the stuff. There is no clean way to blow up the belly of a mountain. Just ask the residents of the Appalachian towns that have been destroyed by it, or the scientists who have studied the practice and concluded that its effects on public health and the surrounding environment are so severe that they recommended an immediate cessation of all mountain-top removal activities.

Finally, and most importantly, the House bill actually includes language that seeks to deprive the U.S. Environmental Protection Agency of its authority to regulate carbon and other greenhouse gases under the Clean Air Act as the Supreme Court ordered it could do all the way back in spring of 2007. Furthermore, under these same provisions, the House bill would deny states the right to consider the effects of their emissions on other countries, and to address such effects in their state climate laws. So, if the language concerning the Clean Air Act and the U.S. EPA in the House bill somehow makes it into a conference bill and passes, we the people would have no legislative means of ensuring that we have another avenue to appeal to for properly addressing climate change if cap-and-trade measures fail to protect us here in the States, as well as others abroad (which for the reasons already mentioned here, seem quite likely). Since state and federal laws are made by men and women who are susceptible to the influence of money and election seasons, we need the ability to have as many alternatives open to seek protection as possible. Recently, Senator John Kerry (D-MA) has been working on a Senate companion to ACESA with Senators Lindsey Graham and Joe Lieberman, which seems slightly more progressive. However, as it is worded now, the bill still falls back on a lot fake alternatives to real emission cuts and will likely evolve to greatly resemble its House counterpart.

But is there any bill that can afford us hope? Yes, and it is called cap-and-dividend. If you haven’t heard of it, it’s no surprise since it’s been drowned out by all the banter about cap-and-trade. One reason is that many high-profile environmental groups, such as Sierra Club and the National Wildlife Federation, support the House bill despite their deep-seated reservations with questionable rules it seeks to enact that are innately counterintuitive to counteracting climate change. However, the real reason you haven’t heard much about cap-and-dividend is this: it benefits the people and not the industries, and we have become a society where corporate interests rule Congress and most of our media. You see, cap-and-dividend is almost purely populist in its core agenda. It offers no giveaways to industries and instead auctions off every permit. And then, amazingly, it does a simply glorious thing with most of the revenue from that auction: it gives it straight back to the American people. That’s right, come tax season the vast majority of U.S. citizens would receive a dividend check, with middle-class and poor people coming out way ahead of those in the upper income. bracket The more energy you save, the bigger the check, which would offset increases in prices at the pump. Specifically, about three quarters of auction revenue would go straight back into the back-pockets of our country’s populace, with only the largest energy hogs (our affluent) losing out a little, and the other quarter would go straight into investments in real renewable energy technologies: wind, solar, and geothermal. Even though the cap as it is currently set in the Senate cap-and-dividend bill is also pitifully low, the auction and dividend process would help to tighten the cap at a quicker pace than its cap-and-trade predecessor and impostor offsets would not be used in place of real emission cuts.

If you want to know more about the current cap-and-dividend bill being considered in the Senate, known as the CLEAR (Carbon Limits and Energy for America’s Renewal) Act, go to  and http://cantwell.senate.gov/issues/CLEARAct.cfm. There, you can even download the bill, which, at under 40 pages and containing fairly straightforward language, is easy to digest. Devised and introduced by Senators Susan Collins (R) of Maine and Maria Cantwell (D) of Washington, the bill offers a post-partisan solution that addresses the financial needs of our suffering citizens, and offers us a genuine shot at survival in a warming world. For more about the pitfalls of cap-and-trade, please take a gander at Annie Leonard's "Story of Cap and Trade," an informative 20-minute short.