Those who care about halting climate change agree that the amount of carbon allowed into our atmosphere should be limited and that the cost of carbon pollution should be paid by the industries that do the polluting.
Why cap and dividend will work
Cap and dividend is a simple and fair means of reducing CO2 emissions.
The Cap: Big polluters bid on a limited number of permits to purchase fuel that will cause CO2 emissions. For example, the amount of coal a coal company could sell to utilities would be purchased annually, and that amount would decrease as earth’s atmosphere approached science-based carbon cap targets.
The Dividend: A large portion of the money raised from these auctions is returned directly to taxpayers, while the remainder is used to invest in clean-energy technology. Each citizen would receive an equal monthly refund – a “dividend” – to cover likely price increases in utility and gas expenses. With 75% or more of the auction cost going back to the public, most people will either break even or come out ahead. And those who use less fossil fuel energy will benefit even more, further incentivizing a decreased reliance on dirty energy.
Why it will last
Cap and dividend is a sustainable long-term strategy for reducing CO2 emissions, because taxpayers are highly likely to support a policy that will help them cope with higher energy prices during the economy’s transition to clean, renewable energy. Additionally, a portion of the revenue will be used for much-needed development investments in clean energy resources, making them cost-competitive with (and eventually cheaper than) fossil fuels.
Already, more than 100 organizations have stated their strong support for cap and dividend, including AARP, Public Citizen, 350.org and CCAN.
The CLEAR Act
In December 2009, Senator Maria Cantwell (D-WA) and Senator Susan Collins (R-ME) introduced a cap and dividend called the CLEAR Act, or Carbon Limits and Energy for America’s Renewal. The CLEAR Act would return 75% of the revenue raised by the sale of emissions permits to each American with a social security number. The remaining 25% would be used for various clean energy and transition assistance investments.
The objectives of the bill, as introduced, were to reduce carbon emissions by 20% below 2005 levels by year 2020 and 80% below 2005 levels by year 2050. The bill included provisions that would allow for these targets to be increased by a simple majority vote of each house of Congress following a proposal by the President.
Senators Cantwell and Collins plan to reintroduce the CLEAR Act in the 2011-2012 Congress.
Learn More
- Find answers to Frequently Asked Questions about the CLEAR Act
- Read CCAN’s cap and dividend policy updates
- “Cap and Dividend: A State-by-State Analysis,” James K. Boyce & Matthew E. Riddle, Political Economy Research Institute. University of Massachusetts. Economics for Equity and the Environment Network, August 2009.