Introducing the Healthy Climate and Family Security Act

A major press conference today featuring Bill McKibben and U.S. Rep. Chris Van Hollen, as well as senior Sierra Club leaders, announced the launch of a new Congressional bill aimed at simultaneously addressing the issue of climate change with that of broad growth in the American economy.

The bill, HR 5721 or the Healthy Climate and Family Security Act, is an update of a bill introduced last year by Van Hollen, a Democrat from Maryland. It is, in essence, a cap and dividend plan that would collect gradually increasing fees on the “first sellers” of fossil fuels, with all of the proceeds being distributed equally to all American citizens. The fees would be collected as a limited number of pollution permits were sold at auction, and the dividends would be paid quarterly to every American with a social security number. The rationale behind this is that since we all are collective co-inheritors and co-trustees of the atmosphere, the polluters should be paying us for the right to use it as part of their business.

Increasing the cost of bringing carbon-based fuels to market will level the playing field, proponents argue, accelerating innovation and the use of low-carbon alternatives both by energy companies and consumers. Increased investment will help create more jobs in the green economy. At the same time, putting more money in hands of consumers (Rep. Van Hollen estimated $1,000 per person or $4,000 for a family of four) will also help stimulate the economy, creating even more jobs.

While it’s not at all clear whether the Republican-dominated House will even take up the bill, it will provide a rallying point and get the conversation going. The fact that the bill is revenue neutral means that is not a tax at all, giving it at least a fighting chance of passing Grover Norquist’s shoot first and aim later test on taxes that so many Republicans have pledged adherence to.

Van Hollen says he fully expects a similar bill to be proposed in the Senate.

What’s unique about this bill is that, unlike cap-and-trade bills, there are no offsets or loopholes that Van Hollen calls “leakage.” Every pound of carbon will be paid for. The dividend portion is also uncommon though there is a similar provision in Alaska’s Permanent Fund, which pays dividends to citizens for tolerating the presence of the oil industry in their state.

Of course, it’s a little naïve to think that energy companies won’t simply pass the majority of these costs along to consumers. But let’s take a look at what happens if they do. If your energy consumption is equivalent to the average American, then you will get back approximately what you paid in. Additional fees paid at the gas pump or to your utility company will come back in the form of dividends when you file your tax return. If you drive a fuel-efficient car and have insulated your house well, you will likely get back more than what you put in. On the other hand, if you drive a gas-guzzler, you might not get it all back. Family size could matter here, too. A family of four might not use twice as much energy as a family of two, though they will get twice as much back. Still the incentive to use less energy will always be there. So, if you were thinking about putting solar panels on your roof, for example, this could be the extra nudge you need.

Former Treasury Secretary Larry Summers pointed out a few weeks back that with gasoline prices hitting lows not seen in years, this would be an excellent time to implement a carbon tax. With gas prices down by well over a dollar, no one is going to scream about a 25-cent increase. The amount raised could be enormous. "That which is not paid for is overused,” Summers said, which is exactly what the fossil fuel industry is doing with our atmosphere: using it a dumping ground for the byproducts of their fortunes, which has inadvertently disrupted our planetary climate system. The current state of affairs provides little incentive for them to cut back. Should this bill become law, there will finally be a price signal that makes managing carbon emissions an economic choice as well as an ethical one.

So, if what Larry Summers said is true, given low prices it will be even more true when consumers learn that they will get money back, possibly more than they put in. For energy producers, it will provide the one thing that has been lacking as they try to plan for the future: certainty. Most companies play to win, but it’s hard to even play when you don’t know what the rules are. With that question settled, the second-guessing is gone, and it simply becomes a matter of execution.

Image credit: Chris Guy: Flickr Creative Commons

RP Siegel, PE, is an author, inventor and consultant. He has written for numerous publications ranging from Huffington Post to Mechanical Engineering. He and Roger Saillant co-wrote the successful eco-thriller Vapor Trails. RP, who is a regular contributor to Triple Pundit and Justmeans, sees it as his mission to help articulate and clarify the problems and challenges confronting our planet at this time, as well as the steadily emerging list of proposed solutions. His uniquely combined engineering and humanities background help to bring both global perspective and analytical detail to bear on the questions at hand. RP recently returned from Abu Dhabi where he attended the World Future Energy Summit as the winner of the Abu Dhabi blogging competition.

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