Climate policy offers an enormous opportunity not only to undo our fossil-fuel addiction and build a stable energy future, but also to reverse the natural unfairness of climate change itself.
I've said it before: energy prices are going up no matter what, with or without climate policy. But smart policy can turn rising costs into broadly shared benefits. It can shield working families, fund a shift to a clean future of new technologies, compact communities, and a trained, green-collar workforce.
Building economic fairness into climate policy is a no-brainer: there are several viable ways to make it happen. In my last post, I described a means to it called "Cap-and-Dividend," in which most public proceeds from auctioning carbon emissions permits finance a program of payments to each citizen. Another approach that shields working families from high energy prices (PDF) comes from Robert Greenstein, founder and chief of the Center on Budget and Policy Priorities. CBPP is the Washington, DC-based think tank that bird-dogs the federal budget on behalf of poor families. Greenstein wrote the plan with colleagues Sharon Parrott and Arloc Sherman.
In short, in this plan climate dividends go only to families with very low incomes, to buffer them from cost increases. It's Cap and Dividend, but only families who need it most get a dividend. Call it "Cap and Buffer." Greenstein suggests compensating the poorest fifth of families for energy price increases and also providing some assistance to those in the second fifth of the income ladder. These families, according to Greenstein, stand to pay between $750 and $950 extra each year for fuel and other goods, once climate policy boosts energy prices enough to reduce emissions by an initial 15 percent. (Without climate policy in place, the only dividends from rising prices are going to energy companies.)
