Want to help the environment and get cash back for cutting carbon emissions?

The Alaska dividends model is just one of several ways the 1,200-page Waxman-Markey climate change bill could be simplified and made more effective.

Climate legislation doesn’t have to be so complicated.


Despite the inconclusive climate conference in Copenhagen, Denmark, when the healthcare debate ends, Congress seems determined to focus on climate-change legislation.

But if the Obama administration and Congress really want to reduce greenhouse-gas emissions, there’s no reason for something like the monstrous 1,200-page Waxman-Markey “Clean Energy and Security Act” that the House passed last summer.

The House bill aims to reduce emissions in 2020 by 17 percent below the levels of 2005, mainly by creating a system of tradable carbon emissions permits. The bill also is laden with renewable-energy requirements, large outlays for alternative energy technologies, energy efficiency standards, rules about carbon offsets, and regulations for coal-fired power plants.

But the bill is long and chock-full of political deals, confusing directives, and subsidies. And it’s so dense that most members of Congress won’t be able to thoughtfully analyze it before the vote. In reality, Waxman-Markey is not about climate change; rather it is an incoherent attempt at social engineering to make us “transition to a clean energy economy.” That goal is so grand and so vague it is meaningless.

What a waste of paper as well as time! The House bill still has to pass muster in the Senate where it will probably be amended with more compromises and directives.

But here’s a better idea: Take the Waxman-Markey bill and properly recycle it.

In its place, Congress should write a bill of about 25 pages. That would be a critical first step toward reducing waste. And it’s sufficient length to spell out the only two necessary provisions: a tax on carbon fuels with the money rebated to taxpayers, and incentives for the gradual retirement and replacement of most coal-burning power plants.

Did you say ‘tax?’

Of course the word “tax” causes legislators apoplexy. And polls confirm that a straight tax on something like gasoline or heating oil would be extremely unpopular with voters. But a funny thing happens to those polls when the tax is balanced by a cut in payroll taxes. People are no longer so overwhelmingly hostile.

Still, a more popular idea might be the Alaska model. In Alaska, royalties from oil production are rebated to citizens of the state. They get a check in the mail for a share of Alaska’s oil money. Carbon tax revenues could be handled the same way; we’d all get a check in the mail. And with a strict rebate rule, Congress couldn’t simply ratchet up the tax without our checks getting bigger by the same percentage as well.

This tax system would have two beneficial effects. Fossil fuels – gasoline and other fuels that when burned emit carbon dioxide, the most common greenhouse gas – would go up in price. That would be good; people would have incentives to look for ways to cut fuel use.

We’d buy more fuel-efficient cars, use better home insulation, and do all the things Waxman-Markey seems to encourage. But the price rise would be offset by the rebate check, and the money individuals got back could go toward energy purchases, if they wanted. But consumers would not lose buying power. The only change for Americans to get used to would be in the relative prices of goods and services for people to choose from.

Replace coal-burning plants

Approximately one-third of all greenhouse-gas emissions in the United States come from the electric power industry and most of that is from coal-burning power plants. In other words, the US could get the 17 percent reduction simply by cutting power plant emissions in half.

And that isn’t insurmountable.

It will be nearly impossible if the US tries to do it with wind or solar and other renewables as the Waxman-Markey bill demands. Those technologies simply are not cost competitive, run only a fraction of the year, and so cannot replace coal plants, which are designed to run 24/7.

But we do have natural gas. Lots of it. Natural gas produces less than half the greenhouse gas-emissions of coal for each unit of energy that’s generated.

And then there’s nuclear power. True, it has a bad reputation and for good reason. Nukes were rushed to market in the 1960s to prove that atomic energy could be used, to paraphrase Dwight Eisenhower, for the benefit, not the destruction, of humankind. Plants were often poorly conceived by companies that were clueless about the technology’s problems. Costs ballooned and operating efficiency was awful.

But current designs and operational characteristics are much more reliable and have inherent passive safety standards that make Three Mile Island-type disasters essentially impossible. Meanwhile, nuclear plants produce no greenhouse-gas emissions. Zero. And if we really are concerned about greenhouse-gas buildup over the next couple generations, nuclear power is a technology that can directly substitute for the worst greenhouse-gas emitter: the coal-fired power plant.

It’s fair to ask: Can electric power production be transformed so quickly? The answer is yes. In the 1970s, oil was a major contributor to electric power generation but in 10 years the amount of oil used in electric generation was cut by 60 percent.

As is, Waxman-Markey is what’s unattainable. Too many goals are dependent on technologies that are nowhere near viable. And other goals are set far into the future such that Congress cannot credibly commit to them.

If we really want to make a meaningful commitment to climate change, and most climate experts agree that we must, let’s start with something clear and to the point: Twenty-five pages should do the trick.

Peter Z. Grossman is an economics professor at Butler University in Indianapolis.

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