It’s all about the cap

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Climate and energy policy touches everything. So it’s no surprise that as Congress finally sets to work on a national climate policy, it confronts a blizzard of complexities.

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But at the end of the day, Congress will face some stark questions. Will they step up to a real commitment to reduce fossil fuel dependence? Will they launch an economic recovery that delivers sustained, broadly-shared prosperity, or just a short-term stimulus and bailout? Will they fight for real, effective climate solutions — as big as the problem?

If we’re too clever and not focused enough, we can make these questions too complicated to answer. With so many competing energy and climate policy ideas on the table, how will we know when our leaders really deliver the goods? How can we hold them accountable for saying “Yes” to these basic, threshold questions?

There is of course no single policy that will effectuate all the necessary solutions. But there is a policy choice that calls the essential question — a single decision that will signify a genuine commitment to reduce fossil fuel dependence and deliver climate solutions at scale, with real accountability for results: a firm, science-based cap on climate pollution.

A carbon cap is not a complete policy blueprint, by any means. But it is a foundation — a serious public policy commitment to do the whole job. It is the clearest possible signal — to energy markets, to the international community, to ourselves — that we are stepping up to the climate crisis and the unprecedented opportunity for economic renewal in solving it. It will unleash investment and innovation to implement existing solutions and develop new ones. It leaves many questions unanswered, but it nails the most important one: “Do we have the will to do what is right and necessary?”

This may seem simplistic. But the biggest danger now isn’t oversimplification. It’s the opposite. The risk is that Congress and public opinion will be fractured by endless debate about policy design permutations. Opponents of the clean energy transition cannot win a simple referendum on fossil fuel dependence. But they may prevail anyway, if we turn the debate into an impenetrable wonkfest or a snakepit of special interest pleadings.

“Why cap and trade instead of a ‘simple’ carbon tax? Why don’t we just do clean energy standards or investments first? Will emission allowances be auctioned or given away? To whom? How much allowance revenue will be returned to households, and how much will be used for public investment? How can we prevent market manipulation? What about ‘leakage’ of jobs and emissions to places that have no climate policy?” …

These and many more fair questions must be answered. But given the potential for paralyzing complexity, we need to simplify and underscore the basic policy choice. Confusion is one of the most effective weapons in the arsenal of those who intend to forestall strong policy action. So before the smoke builds up so thick that we can’t see where we’re going, let’s try to lock in on our destination.

First, “cap and trade” is not one word. The “cap” is the heart of the policy. It codifies the commitment to actually do the job. It opens the market space for solutions. It lights the fire of investment under the growth of the green economy — the necessity that births invention. Tradable permits are one among many design features that may help align economic incentives with the efficient achievement of the cap. But the cap is the driver. And the fact that we are now debating “cap and trade” as a policy design “scheme” instead of “cap” as a fundamental policy commitment is a great source of leverage and comfort to those who just want the whole thing to go away.

Second, carbon taxes are not an alternative to the cap. Like trading, carbon taxes may play a useful role in aligning economic incentives with the imperative to reduce climate pollution. But they are no substitute for the imperative itself, which is expressed by the cap. Carbon prices that reflect the real costs of climate pollution will help a market economy make the right investments. But “carbon pricing” is not the goal. A safe quantity of carbon is the goal. And a cap says, “Reducing climate pollution to safe levels is not just a good idea. It’s the law.”

A carbon cap is by no means the complete answer. Many other public and private actions are necessary: accelerated investment in the new energy economy and good green jobs; protection for households to ensure affordable basic energy service; transition assistance for workers, communities, and ecosystems; investment in international adaptation and mitigation as a cornerstone of a fair and politically practical global climate treaty; stronger energy efficiency and renewable energy standards … and more.

A cap by itself doesn’t accomplish all these things. But it commits us to a destination that we can only reach by doing them. It’s more like a declaration of war on fossil fuel dependence than a battle plan. It doesn’t say everything about how we intend to win. But it commits us to the cause. Finally.

Every President since Eisenhower has warned of the dangers of fossil fuel dependence, and each one has left America more dependent than when he took office. The economic, environmental, and security consequences of this addiction have gone from bad to catastrophic. Now, after a half-century of speeches, platitudes, and false promises, will our leaders deliver a REAL commitment to systematically reduce our fossil fuel dependence? That’s the question that the carbon cap calls.

This single commitment won’t do all the work, but it will say the one, essential thing that we have so far failed to say: “We will do this.” The world needs to hear this. Americans who want to be part of real solutions — from working families who need good jobs to innovators in the new energy economy — need to hear this. Our kids need to hear this, lest they sue us for breach of the intergenerational contract.

And unless and until we say it, the rest of the climate policy design debate is academic.