Hill Heat

U.S. PIRG today announced the release of “Cleaner, Cheaper, Smarter”, a report which makes the case that any greenhouse gas emissions cap-and-trade program have a full auction of emissions credits.

In a supporting statement, numerous environmental and progressive organizations and individuals state:

It is critical that any cap-and-trade program require the auctioning of pollution allowances, rather than giving those allowances away for free to polluters.

By auctioning pollution allowances, we affirm that no one has a “right” to pollute. Instead, we claim the atmosphere as a common resource, to be managed for the benefit of the public, which no polluter may foul without due compensation.

By auctioning pollution allowances, we reduce the societal cost of achieving emission reductions, enabling America to achieve its climate protection goals with less disruption to our economy and the lives of individual Americans.

And by auctioning pollution allowances, we prevent the accumulation of billions of dollars in windfall profits by polluters, and instead put those revenues to work on behalf of the public. Allowance revenues can support efforts to transform America into a clean energy economy and to provide a regular dividend or rebate to American consumers.

We call on state and federal lawmakers to limit global warming emissions to the levels demanded by the science and to auction all pollution allowances in any cap-and-trade program.

The list of signatories is after the jump.

From the Politico, at today’s PPI forum Joe Lieberman said he and John Warner are open to changing their bill from a proposed 76% give-away of pollution credits to 100% auction, following the polluter pays principle:

We’ve heard [calls for a 100 percent auction] from some stakeholders and heard that from some of our members. We’re thinking about it. Warner and I haven’t closed our minds to that. It’s on the table.

From E&E News (subscription required), at an event in Washington hosted by the Council on Foreign Relations, Rep. Rick Boucher (Va.), chair of the Energy and Air Quality Subcommittee of John Dingell’s Energy and Commerce Committee, said he planned to draft a cap-and-trade bill that distributes tens of billions in pollution credits to U.S. industries for free:

I’m disinclined at the moment to do auctioning, at least in the early years to give it very much prominence, if any at all. The best we can do is give the allowances to the emitters according to their needs. We’re going to have enough problems as it is with coal-fired utilities, for example, and other carbon-intensive industries meeting our production schedules. I think perhaps, at least for the early years, it’s better not to compound these problems by imposing a cost on these emitters of having to go out and pay for these allowances. It will be the least painful, most politically attractive way to do it.

In other comments, Boucher asked Pelosi to delay the conference committee negotiations on the energy bill until he produced his draft cap-and-trade bill, but he said she probably won’t. He agrees with the 80% by 2050 target but is unsure of the path to there: “The schedule that takes us to that very aggressive target will be perhaps the most difficult thing we have to negotiate.” He will be releasing a series of position papers over the coming weeks.

In contrast, Nat Keohane, Ph.D., the Director of Economic Policy and Analysis at Environmental Defense offers support for full auctions in a blog post countering Greg Mankiw’s recent NYT op-ed favoring a carbon tax over a cap-and-trade system (in line with Robert Shapiro’s argument):

Mankiw assumes that allowances in a cap-and-trade system would be handed out for free rather than auctioned, thus generating no federal revenue. Now, I admit that this has been the modus operandi in the past. Virtually all allowances were handed out for free under the wildly successful sulfur dioxide trading program in the U.S., set up by the 1990 Clean Air Act Amendments. But that doesn’t mean it has to be that way.

The alternative, full auctioning, would raise exactly the same amount of money as a carbon tax, and there are signs that it’s gaining ground. Earlier this year, several states participating in the Regional Greenhouse Gas Initiative, including New York and New Jersey, announced plans to auction off 100 percent of their allowances. Plus there are calls to phase in auctioning in the European Union’s Emissions Trading System.