Obama’s carbon-cap plan tests Democratic coalition
This piece was originally published in the Omaha World-Herald.
Democratic gains in the Plains, the interior West, the Rust Belt and the Old Confederacy have transformed the political landscape. But one primary goal of the Obama administration is straining the geographic diversity of the new Democratic coalition: capping carbon pollution to avert a climate crisis.
While a rapid transition to a clean energy-powered economy is a main plank of the Democratic platform, 17 Democratic U.S. senators hail from the top coal-producing states, with another four representing the biggest oil-producing states. Several more (including Nebraska’s Ben Nelson) serve constituents whose electricity is primarily generated by coal, which would intentionally become more expensive in any effective climate protection strategy.
Many of these senators have signaled their reluctance to pass a strong carbon cap. Yet Speaker Nancy Pelosi and top House Democrats have pledged to pass climate protection as part of a broad clean-energy bill this year.
As energy is a hot-button issue felt by every voter every day, an intraparty regional clash would jeopardize the new Democratic coalition. Can Democrats creatively bridge geographic differences to craft effective legislation? Or will they take a path of least resistance: a paper-thin compromise that fails to address the crisis?
The big sticking point is how much polluters pay. President Barack Obama’s initial proposal would cap carbon, create new pollution permits and sell them. Since there would be a limited number of permits, we would be able to control the amount of carbon gumming up the atmosphere.
Since private companies would no longer get to pollute the public’s sky for free, the cost of carbon-heavy goods would rise. The revenue from polluters would fund both clean-energy production and consumer rebates, making low-carbon goods more affordable.
Businesses that burn a lot of carbon — like coal and oil companies — are not enamored with paying to pollute. They want the permits given away for free. This makes some political sense; it buys off the opposition.
But we saw what happened with freebies when Europe struggled with its attempt at capping carbon. As the Wall Street Journal recently explained: “That let utilities pocket billions of euros in windfall profits, because they got the permits for free, yet were able to pass on higher electricity costs to consumers.”
The crudest way to compromise is to split the difference, give away most permits for free to start with, and then gradually sell more as the program ramps up. But there is great concern in the scientific community that we don’t have time for a slow start.
There is a better way to compromise. It still would not appeal to coal and oil CEOs, but — more importantly for senators thinking about re-election — potentially would appeal to voters in fossil-fuel states.
Sen. Evan Bayh, from coal-heavy Indiana, last month on MSNBC criticized President Obama’s intention to take carbon-cap revenue from polluters and steer it to taxpayers across the country: “You’re taking money from carbon-intensive states like Ohio, Michigan, Indiana, Pennsylvania, West Virginia, and redistributing it to California, New York.” But in that concern lies the key to compromise.
Jesse Jenkins, director of energy and climate policy at the Breakthrough Institute think tank, has a simple solution: “Return 80 percent to 85 percent of the revenue back to the states where it came from. Because they have the most to lose, and they need the most help.”
Jenkins further recommends focusing on clean-energy investments rather than taxpayer rebates to get the best bang for the buck: creating clean-energy jobs, lowering the cost of clean energy, easing our ability to purchase less energy and making our bottom-line energy bills manageable and stable.
Coal and oil CEOs would still complain, but that’s inevitable. After all, the whole idea is to lessen our dependence on their products. But if voters in carbon-intensive states know that there will be money on the table to create green jobs and keep their energy bills in check, the corporate scare tactics will ring hollow and skittish senators should be reassured.
The key to keeping the Democratic coalition geographically solid so it can effectively govern is thoughtful policymaking. If communicated directly to voters, that could lock in grass-roots support.
Splitting the difference in back rooms with special interests will not only lead to bad policies that sell voters short but also will greatly shorten the era of Democratic dominance.