Hello,

We noticed you're browsing in private or incognito mode.

To continue reading this article, please exit incognito mode or log in.

Not an Insider? Subscribe now for unlimited access to online articles.

Kevin Bullis

A View from Kevin Bullis

U.S. Senators Could Propose Cap-and-Refunds

This approach to cutting carbon dioxide emissions would involve mailing citizens refund checks.

  • March 19, 2010

Even as the health care bill grabs headlines, details are beginning to emerge about a new energy and climate bill being pieced together in Washington by trio of U.S. senators. According to Energy Washington, an eight-page outline of the bill includes provisions for something called a “cap-and-refund” approach to reducing carbon dioxide emissions.

That’s a alternative to the “cap-and-trade” system proposed in a climate and energy bill that pass the House last June. The Senate version of the bill has gone nowhere, prompting John Kerry (D-MA), Joseph Lieberman (I-CT) and Lindsey Graham (R-SC) to work on a new approach. The cap-and-trade system has been effectively branded as an energy tax by those who oppose it. But a cap-and-refund approach might be more appealing. Under such a system, utilities and other emitters would buy allowances for emitting carbon dioxide, with the number of allowances capped to ensure emissions will be gradually reduced over time. Then the proceeds would be mailed out to Americans in the form of refund checks. (It’s a system featured in legislation already proposed by Senators Maria Cantwell (D-WA) and Susan Collins (R-ME)).

It’s likely that not all of the proceeds will go directly back to the people. As much as half could be directed to fund energy research and other government programs.

Both cap-and-trade and cap-and-refund systems can be market-based, allowing emitters to trade allowances and offering them flexibility to cut emissions in whatever way is cheapest. Economists such as Robert Stavins, at Harvard University, say that such market-based systems would be cheaper than renewable energy mandates, which restrict emitters to using renewable energy such as wind and solar when other technologies could be cheaper (such as capturing and storing carbon dioxide).

The Senators haven’t formally proposed the bill yet, but it there have been indications it could be unveiled by April 15th.

Want to go ad free? No ad blockers needed.

Become an Insider
Already an Insider? Log in.
Want more award-winning journalism? Subscribe and become an Insider.
  • Insider Plus {! insider.prices.plus !}* Best Value

    {! insider.display.menuOptionsLabel !}

    Everything included in Insider Basic, plus the digital magazine, extensive archive, ad-free web experience, and discounts to partner offerings and MIT Technology Review events.

    See details+

    Print + Digital Magazine (6 bi-monthly issues)

    Unlimited online access including all articles, multimedia, and more

    The Download newsletter with top tech stories delivered daily to your inbox

    Technology Review PDF magazine archive, including articles, images, and covers dating back to 1899

    10% Discount to MIT Technology Review events and MIT Press

    Ad-free website experience

  • Insider Basic {! insider.prices.basic !}*

    {! insider.display.menuOptionsLabel !}

    Six issues of our award winning print magazine, unlimited online access plus The Download with the top tech stories delivered daily to your inbox.

    See details+

    Print Magazine (6 bi-monthly issues)

    Unlimited online access including all articles, multimedia, and more

    The Download newsletter with top tech stories delivered daily to your inbox

  • Insider Online Only {! insider.prices.online !}*

    {! insider.display.menuOptionsLabel !}

    Unlimited online access including articles and video, plus The Download with the top tech stories delivered daily to your inbox.

    See details+

    Unlimited online access including all articles, multimedia, and more

    The Download newsletter with top tech stories delivered daily to your inbox

/3
You've read of three free articles this month. for unlimited online access. You've read of three free articles this month. for unlimited online access. This is your last free article this month. for unlimited online access. You've read all your free articles this month. for unlimited online access. You've read of three free articles this month. for more, or for unlimited online access. for two more free articles, or for unlimited online access.