After three U.S senators put forward a replacement cap-and trade bill last month, two more U.S. Senators jumped into the climate bill debate, laying down a proposal that would eliminate the cap and trade mechanism, and replace it with a cap and dividend system.
This legislation is introduced by senators Maria Cantwell of Washinton, a Democrat, and Susan Collins of Maine, a Republican. Unlike the climate bill passed by the House of Representatives earlier this year, financial speculators would be shut out of carbon markets created under this legislation. This market, known as “cap and dividend”, would be more streamlined than the House’s cap and trade scheme. Instead of placing carbon limits on most major polluters, the bill would focus only on producers and importers of fossil fuels such as coal mining companies and not power plants and manufacturers. The companies covered by their legislation would be required to buy permits for their carbon emissions in monthly auctions. The majority (about 75%) of the revenue from the auctions would be refunded back to consumers via tax free dividends to offset higher energy and fuel costs .At about $1,100 a year, this dividend will give a net gain to households that strive to curb their electricity and fuel use, but will be insufficient to cover the increased prices for those who consume energy heavily. As more emissions free electricity comes online, consumer energy prices and carbon dividends are to decrease in step with each other. The remaining 25 % of the cap and dividend funds will be awarded to research and development institutions specifically working on technological solutions to transport, power, and efficiency.
Recently senators John Kerry, Lindsay Graham, and Joseph Lieberman put forward a replacement cap-and-trade bill that the trio says will win support from some Republicans and moderate Democrats for its large appropriations for nuclear energy and offshore oil development. Emission cuts are 15% less aggressive than the original cap and trade bill, and begin very gradually from zero instead of forcing a sharp initial cut that is gradually increased. The bill also allows and promotes the use of green tariffs within the allowances of global trade agreements.The three Senators signaled their climate control system would likely follow the same contours of the House-passed bill, which covered most major polluters.
Critics of the House bill and previous Senate proposals have complained they are too broad in scope and that complex carbon and offset markets would invite manipulation and abuse from financial speculators.
Senator Cantwell applauded John Kerry for reaching across the aisle to find a Republican supporter in Senator Graham, but said that his bill was unlikely to gain Republican support because it still relies on the unproven cap and trade mechanism. “I think there’s a lot of interest across the aisle in a process that is simpler and fairer,” said Senator Cantwell. “Cap-and-trade is not as predictable in its allowance system and who gets what. Republicans like predictability.”
The replacement bills will not come up for consideration in the Senate early this year.