Cap and Dividend Momentum Grows

While most pundits have declared the omnibus House and Senate “cap and trade” bills as dead, there is growing momentum for an alternative approach that has populist appeal: cap and dividend.

Publications ranging from the Washington Post to the Economist have recently noted that legislation by Senator Maria Cantwell (D-WA) and Senator Susan Collins (R-ME) seems to be picking up steam, and has become more appealing than the cap and trade measures that have become weighted down by controversial subsidies for fossil fuels and nuclear power.

Also known as the Carbon Limits and Energy for America’s Renewal (CLEAR) Act, the bill has been the subject of a recent lobbying frenzy, with more than 40 organizations and companies now registered to lobby both for and against the bill. Among the energy companies on this list are a diverse group that includes the FLP Group, Calpine, Berkshire Hathaway, Chevron Corp, Iberdrola AS and Exxon Mobil.

Turns out the strategy pursued by many mainstream environmental groups backfired, even as the bills they supported became loaded up with giveways to the very industries that emit the most CO2. Some observers are beginning to wonder if these environmentalists were naive in their attempts to go along for the ride, and support a bill that fell far short of what was expected when President Obama was first elected to office.

“The official position of the Sierra Club was that the House cap and trade bill was an excellent start, and the goal was to strengthen and improve the legislation in the Senate,” said David Bookbinder, the Sierra Club’s chief climate counsel. “My personal view was that the bill was terrible.”

He added, “Cap and trade has now crashed and burned three or four times in Congress, so I think, in the new political environment, the concept is pretty much dead. The only thing that really makes sense is a carbon tax – but that’s the big “T” word.”

Even the Wall Street Journal and ExxonMobil now support a carbon tax.

“I spoke with ExxonMobil two months ago about a potential carbon tax,” revealed Bennet Freeman, senior vice president with Calvert, one of the oldest social responsible investing companies. “ExxonMobil feels a carbon tax is a clear, more principled and more efficient approach to reduce carbon than cap and trade. There is less clutter than cap and trade, but the politics aren’t there yet.”

Because the politics are not yet there, the focus today is on the CLEAR Act as the best hope for something to happen this year in Congress. The measure has picked up support among the environmental justice community.

“Many social justice groups have felt that they have been neglected in deliberations about federal climate legislation in DC and internationally. They feel that they have been locked out of NGO circles. What about issues facing indigenous peoples, landless workers and women?” asks Daphne Wysham, a policy expert with Climate Justice Now!

While far from perfect, she was intrigued by the CLEAR Act’s simplicity.

“The architecture is far better,” she said. “I think the dividend approach makes the Cantwell bill politically palatable. For example, AARP has already endorsed it,” she said. Her main problem is that the targets are still not aggressive enough, as they are similar to those in the House/Senate bills. “But with Cantwell, maybe we can at least get the architecture right, and then ratchet up the targets over time.”

Not everyone has given up on cap and trade, and there are firms, such as 3Degrees of San Francisco, that think that the concept of cap and trade is still a valid path toward greening our energy supply. According to Gabe Petlin, director of regulatory affairs for 3Degrees, we need both a strong federal Renewable Energy Standard and cap and trade program. To address some of the new critics of cap and trade, he suggestes that “the California Renewable Portfolio Standard (RPS) should require that a federal Renewable Energy Credit (REC) be retired for each non-federal REC used for compliance with the RPS in California to avoid any double-counting.”

Other environmental groups, such as Greenpeace, are not convinced that anything meaningful can come out of Congress, period. “The divisions within the environmental community are as bad as I have ever seen,” according to Damon Moglen, Global Warming Campaign Director, Greenpeace USA. Plan B for Greenpeace right now is trying to jump-start a grassroots movement akin to the anti-nuclear movement. “Right now, there is no deep rooted grassroots uprising, and Greenpeace is contemplating trying to spark a unified, broad-based movement that taps into the anger of the populace now turning away from Obama to create real change in the US,” he said.

Other troublesome obstacles to passing federal climate legislation come from Democrats now threatening to strip away the federal EPA’s authority to regulate carbon. The Obama Administration’s proposed termination of the Yucca Mountain repository for nuclear waste has also created controversy, as has directing stimulus funding to a project in Texas relying upon wind turbines manufactured in China.

Aerial view of the Yucca Mountain site in Nevada

Aerial view of the Yucca Mountain site in Nevada

Meanwhile, the most aggressive climate change law in the nation is also facing threats. There is an effort underway to dismantle AB 32, the Global Wamring Solutions Act of 2006. A signature gathering effort to place a ballot measure to repeal the law is underway, though financial support for this reactive strategy has yet to come forward. Still, California faces a crunch time on implementing the landmark law this year.

  • Regulators released a 60-page executive summary of the DRECP at an event headlined by Interior Secretary Sally Jewell and Sen. Barbara Boxer. read here.



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