Friday, May 30, 2008

James E. Hansen, PhD. Reiterates: "Cap and Dividend"

Mr. Hansen is really pushing the politics of global warming. In his recent missive "Dear Governor Greenwash" he reprises his policy prescription "Cap and Divided", returning to ratepayers/taxpayers all the proceeds of a cap-and-trade auction of emission permits, rather than using said proceeds as a piggy bank to fund Congress' pet projects and/or pork*, a position with which I agree.
*(I just realized I repeat myself)
From page four of a five page PDF:

...(3) Public Support: Tax and Dividend

Last week the Energy Secretary for the United States, before the House of Representatives, answering questions about global warming and energy policy, provided a response that was so ignorant and foolish as to suggest that he has been living on another planet or is stone deaf to scientific information. He said that the appropriate policy response is for the government to open up more public land for mining, to open off-shore areas for drilling, to open the Arctic National Wildlife Reserve, and to encourage extraction of oil from tar shale.

The danger is that such egregiously bad policy, bad for all but the short-term benefit of special interests, might be packaged to sound logical to the public. This danger will increase when a rising carbon price – essential for solving the climate problem – is instituted.

For a carbon price to be effective it must, perforce, be large enough to cause a big impact on the public – otherwise it will not help bring about consumer changes that are needed to reduce emissions fast enough. But it must be implemented with care and foresight. For this reason I strongly favor a “tax and dividend” approach. The entire carbon tax should be given back to the public, an equal amount to each person. No bureaucracy is needed to figure this out. If an early carbon tax averages say $1200 per person (it can be collected in various ways – at the well-head, carbon emission permit auctions, etc.) a monthly $100 deposit can be made automatically in everyone’s bank account.

Although energy prices will rise, you can bet your bottom dollar that lower and middle income people will figure out how to reduce energy use enough that, overall, they come out ahead. And in doing so, moving to more energy-efficient products, they will spur economic activity and create jobs.

The tax-and-dividend approach not only minimizes public backlash against climate and energy policies, it also has the characteristics needed to make those policies work.

Footnote: I suggest limiting the number of dividends to four per family. Climate scientists have no special expertise related to the family planning issue, but common sense dictates against a policy that stimulates population growth....