Earth Equity News

NRDC Weighs Regulation-Based and Price-Based Emission Control Mechanisms. Commentary by James F. Handley, CarbonTaxCenter, October 2, 2008. "For almost four decades, the powerhouse Natural Resources Defense Council has stood as the green movement's stronghold for regulation-based eco-solutions... But not price-based mechanisms like gasoline taxes, congestion tolls and carbon emissions pricing. It was striking, therefore, to read NRDC finance advisor Andy Stevenson come out swinging for carbon emissions pricing. In Why Putting a Price on Carbon is Fast Becoming an Economic Necessity, posted this week on NRDC's Web site [and carried yesterday in EE News], Stevenson warns that tightening credit markets threaten to strangle investment in alternative energy. His solution: 'cap and invest': 'The cap forms a limit on the amount of CO2 that can be emitted in a given year. This declining limit is then broken up into permits… auctioned off to emitting entities, creating a… revenue stream of roughly $150 billion a year over several decades that can be used to help collateralize the loans needed to put America back to work and move us in the right direction... to help finance innovative energy solutions for our economy... Once sufficient capital has been deployed to jump-start emerging energy technologies, this program would then be transformed from a 'cap and invest' program into a 'cap and dividend' program that would rebate energy revenues back to the American people... Dividend or tax shift seem essential to counteract the income impacts of any carbon pricing scheme, whether tax or cap. Without revenue distribution, carbon emissions pricing is a regressive tax... The case against cap-and-invest would be strong even in flush times. Our government is lousy at choosing technology winners, particularly this early in the technology race. Remember synfuels? Lieberman-Warner was loaded with subsidies for similar money holes like nukes, ethanol, and 'clean coal'... But cap-and-invest is still a regressive policy that won't do much good up-front. And down the line, as the cap tightens and fossil fuel prices soar, it will become wildly unpopular. Stevenson is right to suggest revenue recycling to offset that pain, but why wait? Why not skip 'cap-and-invest' and go straight for 'tax-and-dividend.' Economists ranging from Ken Green on the right, Bill Nordhaus in the center and Robert Shapiro on the left are all saying 'go for the gold' -- a revenue-neutral carbon tax. Keep climbing, NRDC!"