Carbon Share outside California

Outside of California

Carbon Share can apply to many efforts to address climate change taking place outside of California.

A U.S. Federal GHG Cap: Lieberman-Warner or other legislation

The U.S. Congress has started to discuss a national cap on GHG emissions.

Congressman Edward Markey's Investing in Climate Action and Protection (iCAP) legislation auctions 94% of permits, rising to 100% by 2020. It returns over 50% of auction revenue to consumers. The good news is Rep. Markey is the Chairman of the House Select Committee on Energy Independence and Global Warming.

The Lieberman-Warner bill ("The Climate Security Act") is another example of a bill that Congress is considering to cap GHG emissions. The bill was briefly debated on the Senate Floor on June 6, 2008 before it was removed from the floor by a 48-36 vote where 60 Senators were needed to continue debate and sixteen Senators did not vote. Unfortunately, the bill gives billions of dollars in emission rights to fossil fuel companies, following the poor example of Europe's ETS. It also was opposed by many Senators for spending auction revenues on a laundry list of projects. Carbon Share could improve this bill by auctioning 100% of permits and returning dividends to consumers, or by distributing emission rights (Shares) directly to Americans. This bill or a modified version proposed by Senator Barbara Boxer may be reintroduced next year when we have a new President.

Senator Bob Corker, a Republican from Tennessee, offered an amendment to the Lieberman-Warner bill that would auction most carbon permits and return the proceeds to the American people. The rebates would be paid by check each year to all individuals earning less than $150,000, and all couples earning less than $300,000.

Will any Federal legislation give Americans this choice: cash dividend, tax rebate, or share?

Western Climate Initiative

The Western U.S. States are discussing a possible cap and trade system to mirror the RGGI in the Northeast. It may focus on the electricity sector.

CPC Comment on WCI 11-29-07 (pdf)
CPC Comment on WCI Allocation Design 4-14-08 (pdf)

One interesting debate in the electricity sector is between a "load-based" system and "first seller" or "source-based" system. This is a complex issue. A load-based system regulates retail providers such as PG&E or Southern California Edison. A first seller system, which was proposed by the Market Advisory Committee, regulates the first entity to sell electricity in California. Generally, this would be further upstream than a load based system. It appears that the California Public Utilities Commission has switched from initially supporting load-based to now supporting first-seller.

A report "State Efforts to Camp the Commons: Regulating Sources or Consumers" by Dallas Burtraw of Resources for the Future discusses the pros and cons of each system. The report states that a load-based system might conflict with California's upcoming day-ahead market with the ISO, and also be less transparent than a first-seller (and eventually source-based) system. Many consumer groups, for example in Oregon, are promoting load-based, but there may be reasons looking ahead to promote first-seller (or source-based) instead.

The WCI could allocate allowances to states, which would use their state tax systems to offer consumers the choice of a cash dividend, tax rebate, or Carbon Share. This would return the revenues from an auction to consumers, protect low-income households, and prevent windfall profits in a giveaway system.

RGGI- U.S. Northeast States

The Regional Greenhouse Gas Initiative (RGGI) is a cooperative effort by Northeast and Mid-Atlantic states to discuss the design of a regional cap-and-trade program initially covering carbon dioxide emissions from power plants in the region. In the future, RGGI may be extended to include other sources of greenhouse gas emissions, and greenhouse gases other than CO2.

Currently, Connecticut, Delaware, Maine, Maryland, New Hampshire, New Jersey, New York and Vermont are participating in the RGGI effort. In addition, the District of Columbia, Massachusetts, Pennsylvania, Rhode Island, the Eastern Canadian Provinces and New Brunswick are observers in the process.

Vermont has decided to auction 100% of its greenhouse gas permits. New York and several other states have announced support for auctioning 100% of permits.

The states participating in RGGI could utilize Carbon Share in their allocation of emissions permits. Each state within RGGI could decide to distribute 50% of its permits directly to its citizens on a per capita basis. The other 50% would be auctioned directly to companies. Citizens would cash their shares at banks, and the banks would sell them to companies.

Maryland considers Per capita Rebates

Maryland is part of RGGI and is auctioning 100% of its permits. In April 2008, the Maryland State Legislature is considering SB 268 Regional Greenhouse Gas Initiative - Maryland Strategic Energy Investment Program, which specifies how to spend the auction revenue. One scenario allocates the revenue as follows:

o 46% for energy efficiency programs with 50% of that required to be use in low
or moderate income households

o 23% direct rate relief administered by Maryland PSC on a per capita basis

o 17% direct rate relief for low income community administered through EUSP program

o 10.5% for renewable energy, energy education and climate change programs

o 3.5% for administrative purposes

European Trading System (ETS)

The ETS is Europe's program to use GHG emission permits to comply with the reduction targets in the Kyoto Protocol. Though groundbreaking in its ambition, the ETS has several shortcomings.

Learning from the European Trading System (ETS):

The ETS
• Grandfathered permits to polluters
• Covers less than half the carbon in the economy
• Does nothing to protect consumers
• Has high administrative costs
• And caps that are too high

The ETS is undergoing review prior to Phase II (2008-2012). The shortcomings listed above could be remedied in part by adopting an allocation scheme similar to Carbon Share. In fact, several European citizen groups have been lobbying for this type of modification of the ETS under the name Cap and Share. Cap and Share is supported by the Dublin, Ireland-based Foundation for the Economics of Sustainability (FEASTA). Here is a more detailed description where you can find the Irish Government's recent study on the feasibility of Cap and Share for the transportation sector. A related Cap and Share website has descriptions in French and German as well.

International Climate Treaty (Post Kyoto, Post-2012)

The Kyoto Protocol expires in 2012, but international negotiations have already begun on what the next international climate treaty will look like. Many things have changed since 1997 when Kyoto was negotiated. The science of climate change is much stronger and more dire. We've learned from the shortcomings of the ETS and CDM. Geopolitically, China and India must be at the table in the new treaty. And, the experience of the WTO overh tep ast decade shows how a unified coalition of developing countries can make an impact, even when others try to ignore them.

So, how can Carbon Share be useful in the development of a post-Kyoto international climate treaty?

The per capita aspect of Carbon Share may be very important as a framework for a future international climate treaty. For more information, check out a per capita framework called Contraction & Convergence,developed by Aubrey Meyer of the Global Commons Institute. Here is a great graph that shows C&C in more detail.

Another group, based in the U.S., EcoEquity is working on Greenhouse Development Rights, which have some similarities to Carbon Share.

Tthe FAIR model to assess international frameworks, created by Dutch scientists and economists, may be useful in evaluating and comparing proposals for a post-Kyoto treaty.