Cap and Return
THERE ARE two powerful and opposing economic forces buffeting the American people that could undermine efforts to address global warming. Oil prices are the lowest they've been since June 2007. This good news at the pump may spell trouble for the environment if drivers return to the roads and reverse months of stunning reductions in gas consumption. Meanwhile, the looming recession will lessen the political will in Washington to pursue policies that would add costs to doing business or take money out of the thin wallets of consumers.
Sens. Barack Obama (D-Ill.) and John McCain (R-Ariz.) have committed to putting a price on carbon-burning fuels such as oil and coal through a cap-and-trade system of declining emissions allowances that would be auctioned off to polluters. We agree with Mr. Obama's plan to auction 100 percent of the allowances to reach the goal of an 80 percent reduction in greenhouse gas emissions below 1990 levels by 2050. But how to accomplish this without exacerbating the recession? No problem. Return to the American people every penny of the trillions of dollars expected to be generated by these sales.
This is not a radical notion. In Canada, British Columbia already does what we are proposing. An economy-wide carbon tax was imposed in the province in July. The $1. 85 billion in Canadian dollars that it is expected to generate over the next three years will go back to the population in the form of reduced tax rates for all residents, corporations and small businesses. A climate action credit will be distributed to the poor to help with rising energy costs.
While the climate change bill passed by the Senate this year and the "discussion draft" released by Reps. John D. Dingell (D-Mich.) and Rick Boucher (D-Va.) this month provide relief for low-income families, the measures split most of the potential proceeds among various funds intended to spark innovation and spur development of alternative energy that will one day lessen the dependence on fossil fuels. Even in the best of times, we would worry that this gets government into the business of picking winners (and succumbing to legions of special pleaders) when it should get out of the way and let price trigger the technological efficiencies that business will assuredly develop and invest in to meet or exceed the carbon caps. Giving the money directly to the American people has the virtue of being transparent.
At a time of impending fiscal constraints, the temptation to pull back from pressing environmental goals is high. But taking on climate change and facing down the recession is not an either-or proposition. With global warming happening more quickly than scientists predicted, Earth can't wait.