Message below was sent to EDF [Environmental Defense Fund] on July 12.
Leaders of EDF:
I am a long time EDF member. I know that Fred Krupp and EDF and some other environmental organizations promote a system of carbon cap-and-trade, and that this is at the core of legislation passed last year in the House and now being considered in the Senate. I also have believed for many years that this is the wrong way to go. The book “The Climate War” by Eric Pooley confirmed this belief.
Cap-and-trade legislation is very complicated and it will require a new regulatory structure. No one who thinks about the regulatory failures that led to the financial crisis and the Gulf oil spill should want to start down that road again. The public wants to reduce the role of government, not increase it.
Cap-and-trade invites and even requires that concessions be made to special interests. No one who watched the irresponsible Congressional deal-making that led to the adoption of the health care bill should want to go down that road either.
In a market economy, the best way to discourage use of fossil fuels is to raise their prices. Business leaders and economists have for years advocated a carbon tax. If it starts low and rises slowly and steadily in a way that provides clear price signals over the long term, all participants in the economy can plan and respond constructively.
I understand that a tax is a political non-starter at this time. And I believe that this is the major reason that Congress is considering cap-and-trade. A system of carbon fee-and-dividend will provide the same clear price signals and incentives as a carbon tax, but it will not be a tax and carry that stigma. Impose fees on all fossil fuels, collect them at the source [mine, well, port of entry], and return the revenues to the people as dividends, say by checks in March and September.
I first learned the term “fee-and-dividend” in James Hansen’s book “Storms of My Grandchildren”. I then read economist Steven Stoft’s book “Carbonomics”. He uses the name “untax” for Hansen’s fee-and-dividend, and devotes his whole book to an explanation of how it works. I note that economist Charles Komanoff of the Carbon Tax Center is now using the term fee-and-dividend and advocating this system.
So my proposal is this. Withdraw your support for the complicated cap-and-trade legislation. Introduce a new proposal for fee-and-dividend. Keep the legislation simple and make no concessions to special interests. There will be important consequences.
<> Fee revenue will remain in the private sector.
<> The market place, not the government, will determine winners and losers among providers of energy and products and services that use energy.
<> Government subsidies will not be necessary to encourage people to conserve or use clean energy.
<> Because there are no concessions to special interests, the system will fair and it will be seen that way.
If you still support carbon cap-and-trade, then please explain why you believe this is superior to carbon fee-and-dividend. Thank you.
I have copied and read Fred Krupp’s op-ed in the WSJ on March 21, 2009, and I do not find it persuasive.
Bill Allen (908-766-2876) 07-12-10 0240P