He gets it half-right, 100% auction. The other part is returning the revenues to the people who foot the bill, the American citizen. A per capita check, along the lines of the Alaska Permanent Fund.
Here's what Senator Obama said in Portsmouth:
...100% Allowance Auction:
Without a profit motive or incentive to innovate, corporations do not spend time or money to develop new clean ways of doing business. Obama’s cap-and-trade system will require all pollution credits to be auctioned. A 100% auction ensures that all polluters pay for every ton of emissions they release, rather than giving these emission rights away for free to coal and oil companies.That's page two of an 11 page PDF
Overall, I'm pleasantly surprised -- even shocked -- at its quality. It's a deft mix of good politics and strong, substantive policy. Here are what I see as the three headlines:100% auction of cap-and-trade credits. This is a home run, a real act of standard-setting boldness (the kind that Obama always promises but rarely delivers). The green community should immediately use it to push Clinton and Edwards into making the same commitment, insuring that it's the new baseline for any cap-and-trade program.
You can see some of the thinking of the Institute for Local Self-Reliance in Obama's position. We mentioned the ILSR in "GE Doesn't Own the Sky" ...and neither do the rest of the US-CAP Carbon Cartel, I checked their 10Q's this weekend;
where we quoted David Morris and Peter Barnes as saying:
The U.S. PIRG coalition has also come out for auctions as the price discovery mechanism.
Auction off the carbon allowances and return the revenue as a universal dividend.
A cap sets an emissions limit. That in turn creates an emission value. Who should capture this value? Europe's disastrous initial foray into climate policy taught us what not to do. Carbon allowances were given away to existing polluters. The result? A windfall profit to polluters with no reduction in emissions.
Most jurisdictions are now proposing to auction off emission permits. The revenue from such an auction could be substantial, perhaps $800 million to $1 billion a year in Minnesota alone. What should be done with that revenue?Here we come to the key question. Who owns the sky?..
The funny thing about Climateer Investing's coverage of this arcane but Trillion dollar question is that I've poked fun at GE more than the other members.
Trade or auction doesn't matter to GE, they want the cap part, to make their wind, solar, natural gas and nuclear businesses more valuable.
For all they care, they could throw their coal-burning utility partners in USCAP (Duke, PG&E, PNM, Exelon, FPL) under the next (biofuel) bus.
BP and COP might get thrown under the bus too.
Now about that B.S. "Credit for Early Action" racket...
Happy politicking everyone.