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Bringing the Heat

Forget cap-and trade. This is a climate bill you can love.

This is a tale of two bills—a tale that illuminates how policy-making may unfold under the most progressive administration, and the most Democratic Congress, in a generation. And it’s not a tale with an especially happy ending.

The target of both bills is carbon. From early on, President Obama has indicated that climate and energy legislation would come second in his administrative batting order, only after health care reform. (Originally, he thought that would mean last fall, but health care was like a hitter who fouled off pitch after pitch. Since it took forever, we’ve gotten to the next priority with the midterm elections already looming on the horizon.) The intellectual problem is relatively simple: How do you put a price on carbon so that we burn less of it, and hence prevent the potentially catastrophic heating of the atmosphere? The political problem is immense: How do you change a system that has rewarded energy companies with obscene profits, and that has shaped the American psyche and landscape by providing endless, cheap fossil fuel?

The most straightforward answer, of course, would be a simple tax on coal and gas and oil. Europe began that approach 60 years ago, and, as a result, the continent has dense and livable cities, great train systems, and half the energy use per person. But we live in a society where “tax” is a scary word, and so, from the beginning, everyone has hunted for an alternative, a tax-that-isn’t-a-tax. Both the bills I’ll describe use the same basic mechanism: a cap on the amount of carbon that the country produces, one which goes steadily down as the years go on. The law of supply and demand stipulates that such a cap would raise the price of fossil fuel, which, in turn, would cause us to slowly Eurofy.

Bill One grows out of a strategy called “cap-and-trade.” Credits granting the right to emit carbon dioxide would be divided up among factories and utilities and so on. The ones that are able to most cheaply cut their emissions would have extra credits to sell to the others, and, in theory, the invisible hand should point you toward the shortest, smoothest path to emission reductions. (The invisible hand aided, of course, by the guys at Goldman Sachs, who would actually do the deals.) This approach has worked reasonably well with nitrogen and sulfur over the last few decades, which is one reason our air is demonstrably cleaner than it was in the 1980s. Cap-and-trade has lots of problems (beginning but not ending with Goldman Sachs), but it’s hardly worth detailing them because it’s no longer really on the table.

In the House last summer, the so-called Waxman-Markey bill loaded down the original cap-and-trade formula with 1,400 pages of offsets and sweeteners and bailouts—it turned the reasonably straightforward into the highly complex. And, along the way, it offered one particularly crucial gift to the energy industry: Instead of having to bid for the permits to pollute, it’d get many of them free, sort of like the way we handed over the broadcast spectrum to the networks decades ago. It was an ugly deal—but nowhere near ugly enough for the Senate, where John Kerry needed some votes and so let Lindsey Graham and Joe Lieberman go to work with a vengeance.

By most reports, the cap now being contemplated will initially apply only to electric utilities, there will be some kind of minimal tax on gasoline, and factories will be exempted for a few years to delay any adverse effects on the unemployment rate. And there will be door prizes for nuclear, for offshore drillers, for the shimmering mirage of clean coal! As Kerry explained recently, in its new incarnation, cap-and-trade legislation is “primarily a jobs bill, and an energy independence bill and a pollution reduction-health-clean air bill. Climate sort of follows. It’s on for the ride.” In fact, the White House and the various sponsors now agree that “cap-and-trade is dead” (as Graham put it), and, for the moment, there’s not really a name for Kerry-Graham-Lieberman, so let’s call it what a software writer would call it: a kludge—a messy fix putting one patch on top of another until you end up with a gift-laden package that might, despite its near-incoherence, attract just enough senators to push it over the top. Think health care bill, but with vastly more expensive versions of the Cornhusker Kickback. And it may come with a couple of truly costly giveaways from an environmental point of view: The EPA would be forbidden to regulate carbon, and states couldn’t do anything tougher than Washington allows.

Bill Two—of which we have an actual Senate draft, and one only 39 pages long—has actually been introduced, and by a bipartisan duo: Susan Collins, Republican of Maine, and Maria Cantwell, Democrat of Washington. It goes at the problem in another way. It would set a cap—but it would make the energy companies bid each year for their permits to put carbon in the atmosphere instead of awarding most of them as gifts. And then, it would take most of the money from that auction and—here’s the weird part—uses it to write a check to every American every year. It’s usually called “cap-and-dividend,” though “cap-and-cash” has a nicer ring. Under cap-and-dividend, Americans would pay more at the pump and at the plug because Exxon and Con Ed would pass on the permit fee. And that’s good—when gas is $4 per gallon, you’re likely to ask, “Where’s the bus stop?” But the check in the mailbox will make most Americans whole—seven out of ten would come out ahead, with only real energy hogs hurting. And, politically, it would enable you to more easily ratchet down the cap, and hence the amount of carbon in the atmosphere, in the future—every time you did, the price at the pump would rise, but so would the size of the check. And we like getting checks—even Sarah Palin would admit that the best day of the year for an Alaskan governor involved mailing out the proceeds from the state’s oil revenues.

Now, this is far from perfect legislation. For one thing, its targets are tragically weak (ditto Bill One), though at least they’re plausible, not a stew of offsets that let you claim dubious credit for some forest you’ve theoretically protected. For another, in a just world, those checks would probably go to people living in poor and vulnerable countries who are even now facing the effects of the climate change we’ve caused. (The international funding in Bill One is its best feature, though I’m willing to bet it won’t survive the sausage factory.) Somehow or another, we need to make good on Hillary Clinton’s pledge to send billions of dollars to poor countries already suffering from climate change. (For a really good idea, Google “Robin Hood tax.”) But we also need a bill that cuts carbon emissions with enough vigor that islands don’t drown and deserts don’t spread—that’s the most bottom of carbon bottom lines—and Bill Two at least sets up a plausible mechanism for proceeding down that path.

In compensation for its flaws, the Cantwell-Collins bill is the kind of legislation you could actually campaign around. “In my ten years as a full-time, community-based climate organizer in the Chesapeake region, I’ve never seen an idea truly inspire average people quite like the cap-and-dividend concept,” says Mike Tidwell, director of the Chesapeake Climate Action Network. “When I first explain it to people, they love it. They are relieved to finally learn there is a real solution that makes sense and can get the job done.” Let me second that: In the course of organizing for, our global climate campaign, I’ve given thousands of talks in church basements and community college auditoriums. Cap-and-dividend makes sense to people—it sounds fair. It also sounds post-partisan: It’s a new way of thinking about taxation that should appeal to conservatives as easily as liberals. It’s even been endorsed by those insane, whacked-out leftist radicals at the AARP.

So here’s the question. Why is Bill One, the porky kludge, viewed as “serious” and “realistic” and the center of the action, while Bill Two barely gets a mention?

One answer I heard from half a dozen people on both sides of the issue was surprising: “They’re women.” That is, Cantwell and Collins. One would hope, in Nancy Pelosi’s Washington, that this isn’t actually the cause. But what do I know?

The even scarier, and probably even truer, answer is that Bill One, Kerry-Graham-Lieberman, is seen as serious precisely because it’s weighed down with a thousand compromises. “A cynical press thinks all these corporate giveaways make the bill viable,” says John Passacantando, the former executive director of Greenpeace. “So this is the one that gets the attention, while the smart bill by Cantwell and Collins is ruled unrealistic from the start.” Peter Barnes, the California entrepreneur who is the intellectual father of the cap-and-dividend bill, put it like this: “The assumption among D.C. insiders—including the big green groups—is that buying off industry lobbyists is the only way to pass a climate bill.”

So, just as the health care debate began with the administration promising Big Pharma that any reform would not lead to negotiating prices or reimporting drugs from other countries, so energy legislation begins with a promise to the electric utilities not to interfere with their business model in any major way. And you can make an argument that this is what we have to do. Joe Romm, the indefatigable climate blogger whose collection of posts comes out between book covers this month under the title Straight Up, doesn’t mince words: “It’s energy-intensive businesses that hate [cap-and-dividend], and I’m afraid they drive the process more than the public. If public support mattered, we’d have passed a bill a long time ago!” If President Obama joins Kerry in pressuring senators to sign on to his bill, Romm says, we might get some version of it passed this year. “If we don’t pass a bill this year, it is difficult to see a new effort for a bill before 2013 at the earliest.”

Of course, you could also make an argument that a fired-up president could go out and stump for a new, innovative notion like cap-and-dividend, which is actually fairly close to the plan he campaigned on when running for president. If he did, he’d likely get lots of support—newspaper editorialists have shown far more interest than D.C. insiders. And campaigners—the kind of environmentalists who organize real people—could produce at least a modest groundswell of support. (That will be difficult to muster for Kerry-Graham-Lieberman—I’ve yet to meet anyone eager to take to the streets for a combination of nuclear subsidies and Wall Street enablement, even if it will start us slowly down a carbon-cutting path.) Most of the Beltway greens are backing Kerry, but regional climate groups have endorsed the cap-and-dividend bill; cue the AARP and you’ve got yourself a campaign. Hell, you could run for office on this thing: Vote for me, and you’ll get green energy and a check.

It’s more likely, though, that the lesson the administration will take from the health care debate is that it’s enough to get something through—you can take a compromised bill, compromise some more to get the last few votes, and then claim a historic victory. (The current talk is that the administration may try to include a watered-down dividend as a small part of the deal, to pick up those two votes from Maine and Washington.) This strategy seems almost certain now that the president has announced his support for offshore oil drilling, stressing the need to “move beyond the tired debates between right and left.” If any bill comes up for a vote, or so the argument will go, it will be the first real chance for congressional action on global warming, even if the climate is only “on for the ride.” The pressure on any and all environmentalists and other tired leftists not to oppose it will be powerful. But it’s hard to watch, knowing there’s another path.

Bill McKibben wrote the first book for a general audience on climate change, The End of Nature, in 1989. A scholar-in-residence at Middlebury College, he is co-founder of