Who Owns the Sky?
by Peter Barnes
Over the last two years I have been pondering climate change quite a bit --
both the politics and the economics. One conclusion I've come to is: we
need to create an economic benefit from climate change that is directly
experienced by the majority of Americans -- otherwise the "all pain, no
gain" argument will prevail.
And what might that gain be? Simply put, it would be a "green dividend."
Where would it come from? From auctioning carbon emission permits. How
much might it be? Greater than the $500 per child tax credit everyone talks
about now.
But let me back up a bit. Carbon taxes are out; some kind of emission
permit system is the more acceptable alternative. OK. But do we give the
permits away for free, or do we charge for them? These permits will be very
valuable -- more valuable than the broadcast spectrum we recently handed to
TV broadcasters for free. (Al Gore knows all about that. Ditto Bob Dole,
who called it "corporate welfare" and said the spectrum "belongs to every
American equally." William Safire and the Heritage Foundation said the same
thing. In other words, on the matter of not giving away the sky, there's
political cover on the right.)
So we auction carbon emission permits. Of course they're tradable, and a
market develops, and businesses use that market to figure out the most
efficient ways to utilize our reduced level of emissions. But the auctions
also raise revenue -- according to some DRI estimates, we could be talking
hundreds of billions of dollars annually. That could put a nice dent in the
national debt -- or it could be paid back to citizens in the form of "green
dividends," the way Alaska mails checks of about $1,000 per year to all its
citizens (based on oil revenue).
My pitch is for "green dividends" -- a check in the mail every year to
reward us for good behavior on climate change. It's a lot more appealing
than a tax!
Of course, the dividends must come from somewhere, and ultimately we'd pay
for them at the pump and the meter, as the cost of emission permits is added
to the price of fossil fuels. But so what? Fuel prices are going to rise no
matter what whenever carbon emissions are reduced. If we give away the
permits for free, the higher prices will flow entirely to fuel companies.
Auctions and dividends are a way to recycle the higher prices back to those
who pay them. People who consume less fossil fuels will come out ahead --
which is exactly as it should be. Without auctions and dividends, we'll all
come out behind (unless we own Exxon).
What's politically neat about this approach is that, though money will flow
from permit auctions, Congress members won't ever have to vote for a tax.
Rather, they can position themselves on the side of the people, opposing the
giveaway of public property and favoring the mailing of checks to every
American every year, as in Alaska. Alaskans may have their oil, but all
Americans have the sky!
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(About Peter Barnes:
Peter Barnes is a semi-retired businessman, having been in the
solar energy business in the 1970s, and then a founder and president of Working
Assets until two years ago. He was an early member of the Social Venture
Network and Businesses for Social Responsbility. More recently Peter has been a
senior fellow at Redefining Progress, and he is now a visiting scholar at the
Corporation for Enterprise Developments, two "think tanks" in San Francisco.