By Peter Coy, reposted from Bloomberg Businessweek, July 30, 2014
Economists figured out long ago that the free market is the best way to curb greenhouse gases. But economists aren’t so good at packaging anti-global-warming plans to win over a skeptical segment of the public.
That’s where Representative Chris Van Hollen, a Maryland Democrat, comes in. Today Van Hollen introduced a bill he calls the Healthy Climate and Family Security Act of 2014, cleverly wrapping an economic concept in the virtues of health, family, and security.
The bill would require companies to have permits to produce or import carbon-containing fuels such as oil, coal, and natural gas. The permits, instead of being allocated politically, would be auctioned off by the government, so they would get into the hands of the emitters who need them the most. A similar auction system drastically reduced emissions of sulfur dioxide—which causes acid rain—quicker and cheaper than experts expected.
Here’s Van Hollen’s political twist: The money raised by the permits would make a U-turn and go straight back to the American people—specifically, every person with a Social Security number. The same amount of money to every person, even those who don’t earn enough to pay income taxes.
“This ‘Cap and Dividend’ approach achieves necessary greenhouse gas reductions while boosting the purchasing power of families across the country,” Van Hollen said in a press release.
Van Hollen’s bill would create winners and losers. Big Coal would lose because the cost of permits would induce companies to shift from carbon-intensive fuels like coal to such lower-carbon fuels as natural gas, or zero-carbon energy sources such as nuclear, hydro, wind, and solar. MORE