Marching to Cap and Dividend: An Idea That Can Break The Political Gridlock

By Matson Boyd

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It was an awesome sight this September in Manhattan: hundreds of thousands marched together, calling for climate action, as blue banners swirled through the streets to represent the rising waters. Sister marches echoed all the way around our globe, from Paris to Melbourne to Rio, 162 countries in all. If protest energy is all we need to fight climate change, then success is surely at hand. But the task is daunting: we need internationally coordinated policy to keep fossil-fuels in the ground, and we need it fast. And keeping those fossil-fuels in the ground means dispossessing the oil-rich of trillions of dollars of wealth. This will not come easy.

 

The good news is that we have a very simple policy to rally around: keep most of the fossil-fuels in the ground, regularly auction off the rights to the small amount that can be safely removed, and return the proceeds to the people so that everybody gets a dividend check of the same amount. According to Bill Mckibben, we can safely put approximately 565 gigatons of carbon into the atmosphere between now and 2050. Anything more than that puts us into very dangerous territory. You want to be one of those people who takes some of the 565 gigatons out of the ground? Then you have to pay the rest of us for the right to do so, because that carbon allowance belongs to all of us. This is the core idea behind cap and dividend.


Cap and Dividend isn’t entirely new. Peter Barnes first popularized the idea of a “sky-trust” which would pay dividends back to all of the people equally, and in 2009 Senators Maria Cantwell and Susan Collins introduced a version of cap and dividend that would give 75% of the proceeds back to the people. In August of this year Representative Chris Van Hollen introduced a bill in the House that went one step further, and devoted 100% of the proceeds to per capita checks for everybody. The virtues of the Van Hollen bill are clear. It redistributes huge amounts of money to the low-income and middle class– amounts that function as a guaranteed minimum income for everybody. And since most of the carbon pollution is by the richer classes, they will bear most of the burden of the increased carbon prices, and roughly 80% of the people will come out ahead – for most of us the dividend check will be much higher than the increase in prices.

 

 

And it’s extremely simple, which makes it politically feasible and provides durable public support. Recently Australia, which was one of the first big countries to enact a carbon policy, has reversed course under a new conservative government. This was because of the lack of justice and simplicity. Australians knew they were paying more for energy-intensive things, but didn’t know where the money was going. When people feel the “pain at the pump”, in addition to the enormously higher cost of new houses and new cars, and miners and truckers losing their jobs, they need to know where that extra money is going. With Cap and Dividend, it’s simple and transparent, it goes to all of us, which we then use to create a new economy with new jobs.

 

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Cap and Dividend might seem like an obvious political winner, but it has its opponents, and not just the usual suspects like oil companies. In 2009, energy companies and the green non-profits they fund lined up behind the rival Kerry-Boxer plan, which would tax carbon in a hodge-podge manner with numerous offsets, and pay out renewable energy subsidies, seemingly to the companies with the best lobbyists. The feeding frenzy of lobbyists, aided and abetted by some environmental groups, proved to be a hindrance, not a help, to stopping climate change. The lobbyists demanded exemptions – whereas everyone under cap-and-dividend would pay the same price, under Kerry-Boxer some companies would pay lower prices than others. The lobbyists also came looking for offsets – the right to put extra carbon in the air if, for instance, they plant a forest. But in Europe, these offsets have often proven to be a sham. Companies might take credit, for example, for planting a forest that would have been planted anyways.

 

The offsets, and the renewable energy subsidies, also distract from what stopping climate change is really about. The problem is that huge amounts of fossil-fuel carbon are being released into the air, and the solution is to sharply curtail it. Adding more trees is a sideshow, and in fact forest ecologists find the benefits of additional trees to be of uncertain value. And renewable energy holds tremendous promise, but in the absence of a strict cap on carbon, all that renewables do is reduce the price of energy. This makes some marginal fossil fuel extraction unprofitable but it also makes for an increase in energy consumption. The important thing is the cap on carbon.

 

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Another obstacle for cap-and-dividend is the widespread pessimism of the “Anti-Capitalism First” crowd that believes that only by eliminating capitalism first can we tackle climate change. They have a very good point. How could we possibly succeed at dispossessing tens of trillions of dollars of oil-wealth? The same class of people that control the fossil fuels, control Wall Street and control our government!

 

The answer is that we’ve done this before. One hundred and fifty years ago, slaveowners in the U.S. South were violently forced to give up trillions of dollars in slave wealth. Chris Hayes, in his beautiful essay The New Abolitionism, documents how the economics of slavery changed the way slavery was viewed in the South. In the time of Jefferson, when the price of cotton was relatively low, slavery was considered an odious relic, the end of which would soon be near. But as the price of cotton rocketed upward, and the value of slaves increased, the Planter-elites began to celebrate slavery and vowed to defend it to the death. Yet despite the value of slaves being at an absolute high, and abolition seeming most impossible, the abolitionists were able to build a coalition to seriously challenge it, which led to the end of slavery. If the abolitionists can do that, we can do this. We can be glad they didn’t think they had to change the entirety of the economic system to be rid of slavery.

 

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Cap-and-dividend is a huge opportunity for organizers, but it also poses unique problems. It’s easy to organize small groups of people who might win big, but how do you organize something where everyone wins evenly? We can start by seeing that most of us win more than just a little. In addition to stopping the disastrous escalation of climate change, getting thousands of dollars each year in a dividend check is a huge relief for most of us living paycheck to paycheck. And though the losers will fight back hard — it isn’t going to be easy to dispossess them of $10-20 Trillion in oil wealth — the lesson of history is that harder things have been done.