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Cap and dividend

Confused by the "cap and dividend" policy introduced by Sens. Maria Cantwell and Susan Collins, which has gotten plaudits from both Exxon Mobil and Then check out this admirably clear and short description from economist James Boyce. I'm skeptical that anything simple can actually stay simple in the United States Congress, but it's of course the case that if legislators want a 37-page bill rather than something much more complex, they can just, well, pass the 37-page bill.

By Ezra Klein  |  December 16, 2009; 10:45 AM ET
Categories:  Climate Change  
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Still really confused. The article focuses on the fact that all permits will be auctioned, and that there is a reduction (elimination?) of companies ability to trade permits. If that's the case, how will companies adjust for year-to-year variations in carbon output? How will they get credit for reducing carbon output if they can't sell the permits? I'm missing something really basic here.

Posted by: CarlosXL | December 16, 2009 11:13 AM | Report abuse

The bill is economically clean but environmentally irrelevant. Emissions aren't required to decrease until 2013 and then only do so at 0.25% per year. These targets can be changed at the pleasure of the President followed by an expedited 30-day Congressional review. The bill explicitly says that these targets can be modified for both environmental and economic reasons.

On top of that there is no penalty for breaking these already weak caps; that is, there is a full price collar in every year of the program. All demand for carbon shares above the cap will be honored at the price ceiling, with proceeds going back into the green tech fund.

This is a pretty slick energy independence bill but would do nothing to address climate change.

Posted by: ISOK | December 16, 2009 11:30 AM | Report abuse

What about cow farts and other non-fuel sources of greenhouse gases?

Posted by: tl_houston | December 16, 2009 11:47 AM | Report abuse

Seems to be quite the upgrade here. I just wonder if there's any chance greater than 0% that the 100% auction will survive.

Posted by: etdean1 | December 16, 2009 12:27 PM | Report abuse

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