Any policy that limits supply of fossil fuels must raise their price. An inexorable economic logic binds price to scarcity, regardless of whether scarcity arises from OPEC-engineered production limits, climate policies to cap carbon emissions, or other initiatives that keep fossil fuels in the ground.
The key question is who gets the money? As governments move to cap carbon emissions, attention is turning to this hundred-billion-dollar question. In video interviews on The Real News Network, UMass Amherst economist James K. Boyce outlines three possibilities:
1. Windfall profits to corporations: a “cap-and-giveaway” policy.
2. Revenues to government: a “cap-and-spend” policy.
3. Dividends to the people: a “cap-and-dividend” policy.
In Washington, the introduction of the Cantwell-Collins bill in the Senate in December has put this issue squarely on the political agenda. The bill proposes to auction 100% of carbon permits, return 75% of the revenue to the public in equal dividends per person, and devote the remaining 25% to investments in clean energy and assistance to communities adversely impacted by the transition away from a fossil-fueled economy. Boyce discusses the stakes, not only for family incomes but also the possible fate of climate legislation in the United States.