What can work?
Since the Friday Forecasts are so negative, we are again going positive on Tuesday.
The CLEAR legislation coming out of the offices of Maria Cantwell and Susan Collins, Senators. It makes do-able the cap on carbon. Carbon permits would be auctioned directly to producers and 75 percent of the revenue would be rebated directly on a per-capita basis to Americans. It avoids the complexity and protects the worker and consumer ... actually it is even modestly progressive ... Incentives are in the right places all around for the market to work.
And we hear directly from Reed Hunt on the Green Bank, which reverses the drag on capital investment by energy utilities in green technology.
If we have time, we'd like to step in between the frantic Left and the incompetent Center and ask for some calm, but some pragmatism in getting things in order for a working economy. The Left seems to have gone from complaining about how Obama is in the back pocket of Wall Street to charging hypocrisy and even some alarm when he uses the term "fat cats." We see the banks are not interested in anything other than exploitation of short-term advantage. We also see hundreds of trillions in derivatives, another leg down in residential real estate, an emerging crisis in commercial real estate, and the continued drops in demand from the weak labor market. There is going to be no control without some real control of corruption, by which I mean restructuring the banking and trading system. Since that won't be done any time soon, expect an extended period of conflict.
Look, a politician is a politician. None of us would have been elected president. Rather than attack the guy for inconsistency/hypocrisy, it might be good to congratulate yourselves for moving the needle far enough that this is the line at the center of the road. As a politician, he doesn't need support from the Left, because they have no choice. It may even help him with the dynamic center to hear the shrill and sharp attacks from this direction.
But ... Are you really saying you knew exactly what to do at the time of TARP or could have marshaled the political backing to do it, or that the perception of the country if it could have been done would have been widespread rejoicing?
We understand that Summers and Geithner and the rest of the Treasury-Wall Street cabal are not going to lead us out of this mess, and we think we were among the first to question Triple T Larry, (Targeted Timely and Temporary) when we needed somebody like Stiglitz or Galbraith. But this is not betrayal by Obama, it is a measure of victory. Democracy comes from the bottom up, not the top down.
Maybe we'll start with Reed Hunt, co-chair of the Coalition for a Green Bank, which in Congress is spelled CEDA, Clean Energy Deployment Administration, the only part of the Waxman-Markey Bill to get bi-partisan support, passing 51-7. Here is Hunt speaking at a recent Brookings conference.
Last week we were taking Paul Krugman to task for supporting the complex and untried over the simple and untried on the cap and trade front and ragging on the eminent climate scientist James Hansen to boot. Unbeknownst to us Maria Cantwell and Susan Collins, the Senators, had drafted the perfect compromise between the two. The so-called CLEAR PLAN RETAINS the strength of carbon auction markets while simplifying them considerably, and then rebates the gains directly to the consumer. This creates the price signals and gets out of the way of effective market action, while eliminating the extremely problematic carbon derivatives and secondary carbon trading.
We don't have audio. We wish we did.
We'll read from the press release.
Friday, December 11,2009
WASHINGTON – Today, U.S. Senators Maria Cantwell (D-WA) and Susan Collins (R-ME) introduced bipartisan legislation to reduce global warming pollution, spur job growth in clean energy technology, and return money directly to consumers. The Cantwell-Collins Carbon Limits and Energy for America's Renewal (CLEAR) Act would set up a mechanism for selling “carbon shares” to fuel producers and would return most of the resulting revenue in checks to every American. The legislation will achieve a reduction in greenhouse gas emissions of 20 percent by 2020 and 83 percent by 2050.
“Energy is a six-trillion dollar market opportunity, and green jobs can transform the U.S. economy,” Senator Cantwell said. “But we need a signal on carbon so that this can happen. This bill provides a simple approach to getting off of carbon and on to clean energy alternatives. The CLEAR Act provides businesses and investors with a simple, predictable mechanism that will open the way to clean energy expansion while achieving America’s goals of reducing carbon emission.”
Along with the legislation, Cantwell issued a report today detailing the positive economic impact of the dividends to be returned directly to consumers. According to the report, a typical family of four would receive tax-free monthly checks from the government averaging $1,100 per year, or $21,000 between 2012 and 2030.
Cantwell and Collins highlighted the findings of a recent report by the Institute for Policy Integrity at New York University School of Law that concluded: “carbon pricing is the only signal that can cut through the noise and direct diverse economic actors towards smart, green investments – investments that will create jobs, encourage technological development, and maximize returns.”
Producers would bid in monthly auctions for “carbon shares.” The number available would decrease over time to meet ambitious carbon reduction goals. The resulting revenue generated by the auctions is used for two vital functions:
· 75 percent would be refunded to every individual residing legally in the United States. This dividend would more than compensate for the increase in carbon-based fuel that producers would pass on to consumers.
· The remaining 25 percent would be used exclusively toward clean energy research and development, regionally-specific assistance for communities and workers transitioning to a clean energy economy, energy efficiency programs, and reductions in non-CO2 greenhouse gases.
In this respect, the CLEAR Act differs fundamentally from cap-and-trade bills such as ACES, the Lieberman xxxx which distribute free emissions allowances to fossil-fired utilities as a means of dampening price signals to final consumers. Clear and consistent carbon price signals will be indispensible to efforts to fundamentally transform and decarbonize the U.S. energy system.
Ultimately, the program would be revenue neutral for the federal government. but it would establish a clear, predictable, and economy-wide price on carbon that will be immensely useful to alternative energy development, providing certainty for investments and thus a robust source of economic growth and job creation. The targets are locked in at ambitious levels and so meet the climate's needs.
Not Cap-and-Trade, it's Cap-and-Refund.
Every upstream fossil fuel producer or importer (e.g., coal mining companies, oil and natural gas producers) participates in a monthly auction to bid for “carbon shares." These are permits required to accompany each ton of fossil carbon embedded in the fuel they are placing into commerce.
No Wall Street traders or speculators can manipulate prices or supply for consumers because they have no access to the auctions because participation is limited to the few thousand upstream entities with a compliance obligation.
The fossil carbon cap, combined with spending on non-greenhouse gas reduction efforts, reduces greenhouse gas emissions by nearly 20% from 2005 levels by 2020 and over 80% by 2050.
Charts comparing the various legislative proposals are up on the blog with the transcript. Also links to more online.
Link to Cantwell documents
The details are also covered. Price volatility and excessive costs are muted with a “price collar,” a minimum and maximum auction price. Those who actually eliminate greenhouse gases get to benefit by selling their reductions. And shipping pollution overseas is prevented by rules and charges for carbon embedded in imports.
In these times, there is revenue to be had in economically efficient taxes like on financial transactions, carbon, or high rollers. (In the context of economic collapse, what is the rationale for favoring the elites? They're no longer leading the country into prosperity. Greed is good because ....?)
But a price on carbon is essential for markets to be harnessed to produce planetary survival. Without it, markets are blind. This proposal, shall we say, incentivizes consumers to make money by avoiding the tax and collecting the rebate, gives the market its target price so there is certainty for investors, freezes out Wall Street casino operations on derivatives -- and it is simple! Talk to your Senator. It makes so much sense, the corporate opposition will be down on it in two seconds. This is it.