- Investigates causes tending to destroy or impair the free-market system.
- Explores and develops market-based solutions.
The “Green Summit on Carbon Pricing” was a meeting of some 50 environmental leaders and advocates convened this summer (2011). An impetus for the Summit is the failure of the previous (111th) Congress to pass climate legislation at a time when there appeared to be a public mandate for such action. The broader impetus is the public confusion and political stasis caused by ongoing division in the environmental community over which carbon-pricing mechanism should be the foundation stone for the legislation. This division makes it more difficult for any market mechanism — be it cap-and-trade, cap-and-dividend, or a carbon tax — to gain political traction in Washington. While we do not expect the Summit to resolve this division overnight, we believe it can help the U.S. green movement advocate for effective carbon pricing policy and climate action with greater clarity, unity and impact.
Each of the three leading CO2 pricing approaches were accorded a plenary panel to discuss its mechanism, effectiveness and political viability.
1. Cap-and-trade reduces emissions through a tightening cap and resulting escalating prices for the increasingly scarce permits purchased at government auctions or traded in the marketplace. Offsets have been part of most cap-and-trade bills, making them more adaptable but also more controversial. Revenues are generally directed to specific projects or objectives.
2. Cap-and-dividend also mandates a tightening cap with permits sold at auction, but it restricts the trading of these permits, prohibits offsets, and returns most of the revenue back to U.S. residents as equal, recurring payments (“dividends”).
3. A Carbon tax relies on explicit and rising price incentives to reduce use of carbon-based fuels; proponents advocate returning most of the revenues as dividends or as relief from payroll, corporate, or other existing taxes.
An additional plenary session covered revenue treatment: how funds collected from permit auctions or carbon taxes could be apportioned among specific investments, deficit reduction, or “recycling” back to American households as tax relief or lump-sum dividends.
Investigate causes: The absence of a price on carbon emissions threatens the Earth's climate system on which the American and World economies depend. The Green Summit will air differences and, it is hoped, begin a process of resolution among environmental leaders on the vital question of which carbon-pricing mechanism is best suited -- institutionally, financially and politically -- to fix this absence and correct the resulting market distortions.
Explore solutions: Pricing solutions stand apart from approaches employing government regulations. The irony is that dissension within the environmental community over the choice of a pricing mechanism is leading policy-makers to resort to the distinctly second-best regulatory approach. The objective of the Green Summit is to strengthen the hand of proponents of market-based solutions and make it more likely that one or other market approach will be enshrined in U.S. legislation and policy.
Disunity over carbon emissions pricing has been rampant among environmental advocates. We hear constantly from Congressmembers and their staff that this disharmony has impeded their ability to draft and advance effective climate legislation.
The Summit is rooted in a conviction that this impediment must be addressed, and that a candid but collegial exchange of views and sharing of concerns can contribute to improving mutual understanding and enhancing our movement’s ability to put a market price on pollution. Therefore, we are engaging environmental leaders at a summit at which differences can be aired, policy preferences explained, principles clarified, and common ground reinforced.
While we do not expect to coalesce on a single approach, we hope and anticipate that increased mutual understanding can translate into more effective advocacy, both immediately and over the long haul.
(Check sent: 7/5/2011)