Sacramento,
CA—Capping emissions and making polluters pay for putting global warming
emissions into the atmosphere is the most economically efficient and fair
approach to cutting global warming pollution nationwide, according to a new report
released today by Environment California.
Cleaner, Cheaper, Smarter: The
Case for Auctioning Pollution Allowances in a Global Warming Cap-and-Trade
Program recommends
that the United States and any state or region contemplating a cap-and-trade
program sell 100 percent of pollution permits – called “allowances” – at an
auction as opposed to giving them to emitters for free. Environment California also released a statement signed
by more than 100 organizations and individuals, including former Labor
Secretary Robert Reich, the Consumer Federation of America, MoveOn.org, and
OXFAM, calling for a 100 percent auction.
“Giving
away pollution allowances absolves polluters of their responsibility and even
provides some polluters with a new opportunity to profit,” said Tony Dutzik,
Senior Policy Analyst for the Frontier Group and an author of the report. “Auctioning allowances, on the other hand,
ensures that all polluters pay based on the amount of pollution they release.”
The
report also recommends that revenues from the auction be used to:
- Support clean energy
technological development, including research and development funding and
early market support for clean technologies;
- Invest in energy efficiency
improvements to reduce the cost of the program to consumers; and
- Provide direct consumer
rebates to alleviate any increases in energy costs that result from the
program.
“The
smartest, cheapest way to tackle global warming is to place a stringent cap on
emissions and to make companies pay for every ton of pollution they put into
the atmosphere,” said Jason Barbose, Global Warming Advocate with Environment
California. “We can use the revenues to ease the transition to a clean energy
economy by promoting energy conservation, clean energy and other measures that
lower the cost of meeting the challenge of global warming.”
The
report asserts that the auctioning of allowances prevents polluters from
gaining “windfall” profits as a result of an emissions trading program. Europe’s emission trading system, which includes free
distribution of the vast majority of allowances, has resulted in power plant
owners receiving billions of dollars in windfall profits from the pollution
program. In the United
Kingdom alone, windfall profits from
emission trading have been estimated at nearly $2 billion. These profits come
directly from the pocketbooks of consumers.
“The
decision of how to distribute pollution permits is one of the most important
that policy-makers will make on climate change policy,” said Dallas Burtraw,
Senior Fellow with Resources for the Future and a national expert on the
economics of cap-and-trade programs. Burtraw is currently advising Northeast
States on the design of an auction for the Regional Greenhouse Gas Initiative,
which caps power sector emission in nine Northeast States, and he recently
served on California’s
advisory committee for cap-and-trade programs.
“Households bear eight times as much cost as do producers under a cap-and-trade
program, and households should be first in line for the assignment of allowance
value created by a cap-and-trade program, as long as that is achieved in a way
that reinforces climate goals. An auction can accomplish that.”
“Auctioning
allowances is important to ensuring that we reduce the impact to consumers and
provide important public benefits,” said Mark Cooper, Research Director at
Consumer Federation of America.
“Returning some of the auction revenue directly to consumers will
cushion any price impacts from the effort to cap global warming emissions while
giving American households a direct and tangible benefit from the program.”
In
addition to auctioning allowances, Environment California recommends that
federal, state and regional policy-makers adopt complementary policies that
further reduce global warming emissions, including stronger energy efficiency
standards for vehicles and equipment, enhanced building energy codes, renewable
energy standards for electricity generation, global warming performance
standards for electricity generation and transportation fuels, and incentives
for deployment of clean energy technologies, such as solar power and
“zero-energy” homes.
