In his speech to Congress last week, President Obama asked for legislation creating cap-and-trade program to cut carbon dioxide emissions in the U.S. Now debate is heating up as to what type of system will be most effective.
Representative Chris Van Hollen (D-Md.) is expected this week to unveil a bill for the creation of a cap-and-dividend system that would return 90% of proceeds from the auction of carbon allowances to U.S. citizens.
Obama’s budget calls for returning 10% to Americans.
Also under Van Hollen’s plan, allowances would be sold to the producers of fossil fuels, as opposed to the companies that use the fuel or the energy created from it. In theory, this would simplify the cap-and-trade approach by moving it further up the supply stream where fewer players are involved.
Cap-and-Trade vs. Tax
However, debate continues as to whether any cap-and-trade system will be better than a carbon tax.
A principal difference lies in a trade-off between two types of uncertainty: uncertainty about the quantity of emissions reduction versus uncertainty about the cost.
Read Reuters explanation at the link below.
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Whether 90 percent is returned to the citizens, or 10 percent, with the other 90 percent going towards bigger government, it’s still a “Rob Peter to Pay Paul” proposition. Take money away from businesses, and hand it to the less deserving. I’d call it a tax. At best, one could consider that someone is being hurt by these carbon spewing businesses and perhaps a payment to those who are being hurt is somewhat of a redress. In the end, it’s all designed to make Big Government even bigger. And that’s a scary thought.