Cash for Climate
Senator Maria Cantwell (D-WA) Credit: Wikipedia
Democratic Senator Maria Cantwell of Washington has a plan for limiting greenhouse gas emissions and reforming our energy sector. Senator Cantwell and Republican Senator Susan Collins of Maine are pushing for the CLEAR Act that calls for a cap and dividend method. This approach makes polluters pay for their emissions and gives the revenues to consumers. Senator Cantwell tells host Jeff Young and why she thinks a cap and dividend system is superior to cap and trade.
YOUNG: When the U.S. Senate returns to business in a few days a bipartisan trifecta of senators will be trying to hammer out a compromise bill on climate change. Senators John Kerry, Lindsay Graham and Joe Lieberman propose a carbon cap on the electricity sector and some sort of carbon fee on oil. The details are murky, but there’s a clear alternative offered by another senator.
Senator Maria Cantwell, a democrat from Washington, has partnered with republican Susan Collins of Maine for what they call the CLEAR act. It proposes a cap and dividend alternative to cap and trade—auctioning off all the carbon emissions permits and returning most of the money to consumers. Senator Cantwell is with us now to discuss her bill. Welcome to Living on Earth!
CANTWELL: Thank you very much.
YOUNG: What is the CLEAR act, and why do you think your approach is better than what Senators Kerry and Graham are trying to do?
CANTWELL: We need predictability for the future; we need people to plan to get off carbon, but to do so in a way that it’s clear that we’re going to make the reduction, but with the least impact to the economy. We propose doing that with a simple auction and an energy rebate back to consumers.
YOUNG: Senator, you’ve been a very vocal critic of many abuses of energy trading, and I think a very insightful critic, and played an important watchdog role—
CANTWELL: Thank you for that, thank you for noticing.
YOUNG: What are your concerns about a carbon trading system, carbon market?
CANTWELL: Well, we know that there was a report in Copenhagen that 95 percent of the European market could have been subject to manipulation. We know that our U.S. economy is still reeling from the lack of oversight and transparency in our housing markets and things like derivatives that are still kind of operating in very dark markets without the kind of transparency that’s necessary.
We don’t need to repeat that with carbon. What that does is it just drives volatility and the one thing we know, if we’re going to make this transition off of carbon onto cleaner sources, we don’t want volatility in the mean time. We want that to be a transition that is smooth as possible, and trading really will lead to that level of volatility.
YOUNG: Do you think we run the risk of a sort of carbon bubble?
CANTWELL: Well, we know that there were carbon futures in Europe being cut up in tranches and sold similar to credit default swaps. That means the true value and the ability to pay on that value was being hidden.
And I think that it’s hard for the U.S. Congress right now to stop the current manipulation that’s happening in these dark markets on these toxic assets, and that’s the overall market, so we’ll see what happens with regulatory reform whether we’re able to accomplish that. But I think starting a new market when you don’t need that level of volatility—in fact, you’re really trying to discourage it—would be the wrong way to go.
YOUNG: As I understand it Senators Kerry, Graham and Lieberman are—they’re essentially in what you might call the horse trading stage of things and trying to craft some sort of compromise that involves more off-shore drilling, more subsidies to nuclear and coal industries in order to get people to buy into the process. What do you think of that approach and wouldn’t you have to do the same sort of thing to overcome the vested interests here?
CANTWELL: We’re trying to get a legislative solution that the American people can buy into, that they can see that this is a workable way for us to get off of carbon; and to my more skeptical colleagues, a process that you literally are going to put into legislative statute, that you know how the formula works and how the reductions will be made. So you’re not worried about this changing.
The predictability is in the simplicity of the formula. And I think that while there probably will be discussions on how to add the larger energy pieces to this, what we’re really trying to do is unveil a concept and push an idea that is the level of simplicity that is needed to get America’s buyoff. It is a clear and predictable path.
YOUNG: You’re on the energy committee of the Senate, you have a good feel for the complicated politics here—what do you think, what are the chances that we will see a meaningful climate bill in this election year?
CANTWELL: I don’t know what day or month we’ll have a solution to this, but I know this: that we are going to see rising energy costs again this summer. That could be over 100 dollars a barrel, I’m sure that in the not-to-distant future it will go well over 100 dollars a barrel.
And I think that EPA will ultimately want to make a decision and move forward here. And I think those two factors will drive my colleagues to look for a solution like the CLEAR act that is a more predictable path.
YOUNG: Senator Maria Cantwell of Washington, thank you very much.
CANTWELL: Thank you.
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