As this is written, two House Committees — Energy and Commerce and Ways and Means — are considering climate legislation. Both are following similar timetables, and hope to report bills by June.
In the case of Energy and Commerce, chairman Henry Waxman has released a 648-page discussion draft. The draft creates a large and complex carbon trading system but is silent on two key questions — whether initial permits will be auctioned or given free to polluters, and how revenue from permit auctions, if any, will be used. Despite the silence on these questions, however, it is widely expected that the bill will give over half the initial permits to various industries for free, much as the European Union has done.
By contrast, in Ways and Means, several short and simple bills — some involving a carbon tax, and others involving a cap with 100% auctions — are being considered. All the Ways and Means bills have the same framework: they raise the price of carbon economy-wide and return the money to the people, thereby protecting families from the impact of higher prices. In some bills the revenue is returned through tax reductions. In Rep. Chris Van Hollen’s bill, it is returned through monthly per capita dividends.
This post is not about the merits of either committee’s approach. It’s about allowing both committees to complete their work and present to the full House a choice of frameworks for pricing carbon.
At the moment, there is heavy pressure from many quarters to abort the Ways and Means Committee’s work. The party line is that two bills would be a distraction, and that everyone needs to get behind the Waxman bill, whatever it turns out to be.
In my view, this ‘my way or the highway’ approach is ill-advised. It is too soon to shut down a wider discussion of carbon pricing, and too soon to eliminate alternatives. The time will come when that discussion must end and a choice must be made, but that time is not yet.
Why do I believe this? Putting a price on carbon (or as I would prefer to say, on air) is a BIG DEAL, comparable in magnitude to Social Security. It has monetary impact in the trillions, a huge impact on families, and is something we’ll have to live with for 40+ years. It’s important that the way we price air/carbon is not a shotgun marriage, but a marriage entered into with public understanding and consent. The purpose of having two bills and debating them is to foster that understanding and consent.
The approaches being considered by the two committees are significantly different. One would create a complex, opaque system that favors politically powerful corporations, the other would create a simple, transparent system that returns higher prices directly to the people. It is a GOOD THING for Congress and the public to know that these two approaches are possible, and to discuss them for a while. Snuffing out that discussion before it happens would be a disservice to the democratic process, and ultimately to finding a durable climate solution.
Moreover, putting all our climate eggs in one basket is risky. If that basket breaks, as well it might, we’ll have to go back to square one, and we’ll have lost much valuable time. It’s therefore prudent to offer more than one way forward. What the Ways and Means Committee is doing is developing a second way to price carbon and putting it out for public view. That is a service for which they should be praised, not condemned.