I’ve also been promoting Cap & Share (www.capandshare.org and http://www.carbonshare.org), which is even more explicit in the “people own it” frame. Carbon Share would divide the emissions under the cap by the population and mail everyone a certificate (say 16 tons CO2), which you could cash at a bank, and the bank turns around and sells it to the upstream company. It has a similar outcome to the Sky Trust, and in fact I think the two systems can co-exist through an opt-in check-box on your tax form: “How would you like your climate allocation? Check one: Dividend, Tax Rebate, or Share.”

Also, the Sky Trust does not negate all the other liberal ideas. Let’s put the whole government spending apparatus into solving climate change. But let’s also remember, “people own it.”

In “Cap and Invest” you’re taking hundreds of billons of dollars from consumers to give to big corporations. I think it’s just naive to think that’ll fly come election time.

(See gas prices as a political issue this summer)

Let’s look at them one at a time:

Air

Making polluters pay to pollute the air is the same under a Cap-and-Invest and Cap-and-Dividend scheme, as long as allowances are auctioned. If the rationale for auction is explicitly pinned on the concept of the air as a life-sustaining Commons, I think this is the same under either.

Wealth

Same as above here, right? Cap-and-Invest and Cap-and-Dividend amount to the same re-conceptualization of wealth built on the concept of a Trust or Commons, as long as pollution permits are auctioned to pay for their violation/degradation of the Commons.

Markets

I think a cap-and-invest scheme trumps the dividend plan here, in that it not only forces companies to pay the full cost of doing business and polluting the Commons, it also helps re-invest those funds into building a truly sustainable market, both economically and ecologically, built on a new clean energy economy. Cap-and-Dividend actually leaves it up to market price signals alone to spur that new sustaining and sustainable market.

Government

Again, Cap-and-Invest trumps the Cap-and-Dividend scheme in reinventing the role of government as well. You say that Cap-and-Dividend would help foster the positive role of the Government “to promote the development of infrastructure for public benefit,” but Cap-and-Dividend limits this role to setting price signals and closing externalities (as you say, “the creation of public benefit markets”). Cap-and-Invest not only reimagines Goverment’s role in setting market conditions for the public benefit, it also reinvents (or reinstates, e.g. the New Deal), Government’s role in investing directly in the public good, via infrastructure, critical technology development, etc.

The Role of People

I still feel like the role of people under a Sky Trust type Cap-and-Dividend is mostly passive. Their role is to receive dividend checks in the mail and then what? Spend them on consumer goods? Spend them in their increased energy bills? This is the part that really confuses me.

Instead, Cap-and-Invest, and a larger investment and innovation-centered political agenda would support innovators and social entrepreneurs at all scales, and tap the spirit of ingenuity, courage and optimism that should rally and inspire Americans to rise to a grand challenge. That seems like a much more active and empowering role for individuals to play in building a better - more sustainable, just, and prosperous - future than simply receiving checks in the mail as industry polluters their Commons.

This is the central point for me, and I’d love to hear your thoughts on how Sky Trust works here. Thanks for the responses Joe,

Jesse

Great debate, and its happening everywhere I go.

The answer, I believe, is both.

Carbon capping with cash back allows us to set the emissions reduction trajectory we desperately need. We can drive the price of carbon permits through the roof, as you might expect the carbon markets will do when we pass a law that requires America get back to 1990 levels, and reduce emissions 20-30% below THAT by 2020.

Gulp.

Cap and Cash Back is the only program that could legally limit emissions that deeply, and not provoke a huge societal backlash–the polluter/middle class coalition, with unlimited access to polluter wealth to stoke the fire of resistance. It happened just that way in CA when proposition 87 went down, a teeny oil tax to fund green innovation. The polluters drove their advertising campaigns to African-American and Latino news and radio outlets.

Today, as regulators in St. Paul debated whether to approve a new coal plant, they tabled it due to uncertainty about the future price of carbon. (That’s good.) As the US Senate debated the oh-so-tepid Boxer-Lieberman-Warner bill, a multi-state utility Basin Electric ran ads in major papers across the region with brown faces and Indian faces saying “call Congress, there has to be a better way”. (That’s bad.)

Okay, saying that I am a cap and dividend guy, I am no market fundamentalist.

I believe that Breakthrough/Apollo/ green jobs/ energy innovation vision is very powerful, is a great message platform (Fresh Energy uses the “modern- innovative-21st-century-energy frame” constantly). Everyone would concede its not mainly driven by government spending, but lots of stuff requires public investment. $30 billion per year is a very modest sum in America. Its about a month in Iraq. Its about 1/3 of oil industry coal industry giveaways. There is plenty of money in America, without turning the carbon market debate into a public finance debate. Getting a high price on carbon soon, and getting a steep,legally-binding reduction in emissions soon are one part. Jump-starting the green economy is part two. We don’t need to finance part two with money from part one.

We don’t have to finance the investment vision that drives a public passion by taking the money from the poor and middle class. Imagine the TV ads that have “Harry and Louise” facing foreclosure, blaming the Arab Oil cartel and environmental advocates of the “cap&spend” program. “Harry, I heard that the purpose of the program is too make these crazy energy prices even HIGHER! That’s right Louise, and I heard President(fill in the blank)on the radio. He’s for it too!”

Two parts:

Cap and Cash Back. Shift oil subsidies to energy innovation and green jobs. Let’s vote.

You said:

“I guess I’m confused how the Sky Trust model really helps shift our politics though. Can you please expand on that point.”

The shift is conceptual. The Sky Trust proposal embodies very different concepts for air, wealth, markets, government, and the role of people. Here is a (very short) comparison of old vs. new meanings for each:

Air
In Western culture, air is conceptualized as an empty void. It is a “nothing” that is invisible to us. Thus, it is no big deal if other invisible things (like CO2) are dumped into it. A nothing has no inherent value.

Sky Trust is built on the idea that air is conceptualized as a life-giving substance - a “something” that is inherently valuable because we depend upon it for our survival and flourishing. Thus, if it becomes contaminated by something that jeopardizes our well-being (like CO2) there is a problem.

Wealth
In our current opinion environment, wealth is typically thought of as money that individuals (persons or institutions) have control of. This is a narrow, or impoverished view of wealth.

Sky Trust is built on the metaphor that Wealth is Well-being, where anything that contributes to individual and collective well-being is a source of wealth. Thus, the air - by its life-giving properties - is a source of wealth.

Markets
The dominant understanding of markets in our culture is that they are (a) natural and (b) inherently good. An inference that emerges from this concept is that government is wasteful and burdensome to markets.

Sky Trust explicitly seeks to “construct a new market” which means that markets are conceptualized as a tool for society that is constructed by people to serve various purposes. By requiring companies to pay the full cost of doing business, it promotes an understanding that markets can create profits while also preserving sources of well-being (other forms of wealth - including the common wealth).

Government
As alluded to above, there is a widespread view that government is (a) external and distinct from markets and (b) inherently problematic to their functioning. With the understanding that markets are constructed, the role of government becomes more positive - to promote the development of infrastructure for public benefit (including the creation of public benefit markets).

The Role of People
The standard approaches to climate policy place people in the role of passive consumer, including for the most part the investment schemes that focus on large-scale development projects. This happens when policies focus on the role of industry - with no direct reference to the role of people.

Sky Trust explicitly places people in the role of citizen, shifting the frame to a context of civic responsibility for preserving the common wealth.

Each of these conceptual shifts is part of the political transformation that needs to happen. Not only must there be new activities for people to experience.. there must also be shifts in the conceptual structures people reason with.

This cognitive dimension of the proposal is invisible to most of the tenets from Western philosophy about the nature of the human mind. It is the vital component I am referring to.

All the best,

Joe

Again, I think we agree on your main points here. We definitely need to transform American politics and I can assure you that Breakthrough Institute is committed to that. That’s a large part (the largest really!) of what the Breakthrough Generation fellowship this summer is focusing on, and is clearly a focus of the larger youth climate movement (i.e. the Power Shift concept).

What real reality demands is clearly inconsistent with what current political realities permit. Just take a look at the woefully inadequate Lieberman-Warner bill for a start (and even that bill is going down). Let’s be very clear that Breakthrough’s work is very much a work in progress (and we welcome your advice on where we’re going from here).

I guess I’m confused how the Sky Trust model really helps shift our politics though. Can you please expand on that point.

The idea of the commons is important, but I think it’s much more powerful to inspire the concept of collectively building a new, robust energy economy that harnesses and is fueled by American ingenuity, courage and innovation, and is sustainable, both economically and ecologically. The concept of the commons can be invoked in the investment agenda Breakthrough advocates as well I imagine (i.e. Polluter Pays invokes an idea of the commons and linking it to reinvestment in public good - i.e. building a clean energy economy - seems like not too hard a connection to make).

And I think it’s important to not gloss over the economic/practical arguments about Sky Trust in that I’m afraid it just won’t work. When we’re talking about fighting off the climate crisis, we can’t really afford to ignore that, right?!

When I say Sky Trust (or cap-and-trade aka “cap-and-pray” in general) invokes a free market or invisible hand ideology, what I mean is that it relies on the pricing signals of the cap alone to drive investment and innovation. There’s no explicit focus on investing directly in solutions, and the fact that Sky Trust would spend the trillions the cap can raise entirely on dividend/rebate checks to individuals means it clearly does not prioritize investment very highly. Even the iCAP bill at least splits the two (with roughly half for investment and half for dividends). I have serious doubts that even if dividends make the high energy prices more politically palatable, that the very high carbon prices necessary to drive much more than fuel switching and low-hanging efficiency options will be politically sustainable in the long run. Relying on pricing alone means we need very high prices, and it means that we do nothing to really prime the pump for innovation, or create the fertile ground for entrepreneurial ventures across all levels, including community-scale solutions.

I agree that we need to find a way to broker these investments that avoid the pitfalls of our current political establishment. Pork-barrel, corporate-dominated congressional politics don’t lend well to smart investments for the public good! And we certainly need a shift in American politics away from conservativism to make this work. But for me, Sky Trust is not an inspiring model of how that shift will happen, nor is it an inspiring example of a workable climate policy. Cap-and-Invest seems much smarter, more progressive and more likely to work…

Cheers,

Jesse

Given the dire warnings from the IPCC, etc. I think the focus should be on reductions.

If you cap emissions (or carbon supply as Peter recommends) you’re going to increase the cost of energy/gas/and everything that uses energy & gas (at least in the short term). To make it politcally possible, you must protect people’s incomes. Otherwise political opportunists will be quite successful blocking passage & running against the incumbants that triggered those increased costs. That, as I understand it, is the essential premise of the Cap & Dividend idea.

In addition, the descending cap and carbon pricing that occurs in a Cap & Dividend system helps drive increased investment in green tech. There was already 100 billion in investment last year worldwide without any cap/pricing– that will explode with legislation.

I’m dubious on the polling done by the breakthrough crew. But one thing comes through in their polling loud & clear- people are worried about increased costs. That’s something we didn’t need any polling to understand, but it’s good to have the data.

Given that data (and the immediate need to cut emissions), shouldn’t our goals be 1) emissions reductions and 2) a mechanism to deal with the biggest politcal hurdle to those reductions?

Anyway, I think that it has more politcal legs than a massive tax increase to weatherize homes…

You’ve made some great points. One reaction I have is the need to transform our politics if this is going to happen. Right now there is a stranglehold on our political system by governing bodies that have no public accountability. Most of the highest ranking officials have a “revolving door” and “fox guarding the hen house” situations where the powers they represent have colluded to shift governance away from the people.

Creating a large investment fund without replacing this existing power system is nothing more than throwing more of our common wealth into private coffers.

Another comment about the poll… we explicitly stated that the term “rebate” should not be used. It evokes a very different frame than “payment” or “dividend.” I know that most economists think that $50 less paid in taxes is equivalent to $50 given as payments at $10 per month for ten months. This is NOT the same in cognitive terms, only in numerical terms. The meanings of the two situations are vastly different. So one of the ways the poll was misleading was the use of the word “rebate.”

Also, the payments in Sky Trust do not support “invisible hand” or “free market” concepts. The shift in what it means to do business is profound, as is the introduction of the concept for the commons. There is no invisible hand involved in preserving the wealth inherent in clean air.

The issue of how investments should be made (including the scale of projects and institutions involved) is critical. This is clear with the push for “biofuels” last year that was effectively a huge giveaway to petrochemical companies (for production of fertilizers and genetically modified crops), giant agribusiness corporations, and long-distance distributors. It is a great example of how we have to change our political system before any kind of Apollo project will work.

I don’t trust that large-scale investment plans that fail to take into account how people think now are going to cut it. The dominant frames in our culture are conservative. The “commonsense” understandings of markets, government, business, the environment, etc. are all stacked against us. Without changing this cultural milieu, large investments will fail.

Peter’s proposal is an attempt to change the dominant modes of thought. Critiquing it in economic terms is inappropriate. It is not an economic proposal. Instead, it is a COGNITIVE proposal. Let’s talk about alternative proposals for shifting the discourse, especially the dominant modes of thought. A list of programs (like what you wrote), though useful and good, are not about this problem. And it is the critical problem that needs to be addressed first.

The Breakthrough Institute has not responded to this. Apollo project thinking does not challenge the status quo of ideas. Something more is needed.

Best,

Joe

“Isn’t it time we had an honest debate built on the recognition that there is no “single solution” and that a combination of approaches is needed. The public needs to be more engaged and called upon to participate. A positive role of government needs to be established and built upon. Strategic ideas planted by conservative think tanks need to be challenged and replaced. And investments need to be made in transforming our society for the betterment of our citizens.”

Why do the investments have to go entirely to big corporations? We need innovation and clean energy solutions at all scales, from the individual to the institutional, and that means creating fertile ground at each of those levels. Breakthrough’s investment agenda does not call for major corporate giveaways (that’d be the Lieberman-Warner agenda!), it calls for a massive series of investments (massive in both depth AND breadth) to stimulate clean energy innovation and deployment at all scales.

I don’t doubt that Peter IS committed to clean energy investment. However, the Sky Trust plan puts literally trillions of dollars of carbon auction revenue back into consumer hands in the form of cash, relying on the carbon market price alone to spark behavioral change and clean energy solutions. That seems like an oddly neo-liberal faith in the invisible hand of the market, doesn’t it?! I’m also confused as to how handing out refund checks really gets individuals engaged in climate solutions.

The auction revenues could instead be investment in a series of programs that create fertile ground for all kinds of innovation, social entrepreneurial ventures, community-scale and locally-appropriate solutions, as well as the large-scale infrastructure and energy deployment investments we ALSO need to see.

What if, to just mention one example, we created a community energy revolving fund that was accessible to neighborhood associations, public schools and local governments to propose locally-appropriate, community-initiated clean energy/energy efficiency projects. Billions of dollars in funds would be made available to cover the capital expenses of efficiency projects, renewable district energy systems (like the one we’re working on in SE Portland) and more. The funds would be repaid over time, at zero interest, into the revolving fund so that they could be spent later on future projects and the fund replenishes itself as well as getting additional auction revenue proceeds each year, building in size every year. Wouldn’t THAT be a better way to involve individuals and communities in tangible, locally-appropriate energy solutions than simply sending them refund checks to spend on iPhones or Wal Mart goodies?

Or, to cite another great recent example, what about the Cap-and-Caulk (as in weatherize) proposal written up by Sightline folks at Worldchanging here. Isn’t it better to help weatherize the homes of low-income folks to insulate them from energy costs, rather than simply hand them checks to mail to the utilities?

It’s the hole give a man a fish, he’ll eat for a day; teach a man to fish, he’ll eat for ever, kind of thing. Why send out rebate checks to be sent to utilties to cover increased energy costs when we could instead invest in making sure people don’t have to pay those increased energy costs (ever again!) by spurring efficiency and clean energy adoption?

Then there’s the polling info cited above… It seems that refunds aren’t even as popular as you might think, and people would rather see funds re-invested in solutions. You get more bang for your buck that way too.

Now, some blend of consumer rebates to low-income folks to counteract the regressive nature of the carbon costs makes sense, especially at the beginning (weatherization programs CAN ramp up fast though, and should get rolling right off the bat). But ALL of the auction revenues as Sky Trust proposes, or even HALF of them as iCAP proposes seems WAY too much to me, and a HUGE waste of funds we should be directly investing in climate solutions.

My 2 cents (or an inflation adjusted buck twentyfive!). Cheers,

Jesse Jenkins
co-director, Breakthrough Generation