On December 11, 2009, Senator Maria Cantwell (D-WA), along with Senator Susan Collins (R-ME), introduced a “cap and dividend” climate bill called the “Carbon Limits and Energy for America’s Renewal (Clear) Act.” The Clear Act aims to lower greenhouse gas (“GHG”) emissions 20% from 2005 levels by 2020, 30% by 2035, and 83% by 2050.
Similar to other climate change bills proposed this year, the Clear Act will use an auction-based approach for allowances in order to lower GHG emissions. Specifically, the Clear Act will sell allowances at monthly auctions with a starting floor price of $7/metric ton and a “safety valve” or ceiling price of $21/metric ton. Both the floor and safety valve prices gradually increase over time primarily based on the rate of inflation and the rate of capital investment return. Unlike other recent climate change bills, the Clear Act does not include offsets, which many emitters consider key to mitigating costs for purchasing allowances.
From the revenues produced by the monthly auction, 75% of the proceeds will go directly to all U.S. residents through a “Carbon Refund Trust Fund.” The refund would be a tax-free “energy security dividend” that, according to Senator Cantwell, would average about $1,000 annually per household from 2012-2030. Senator Cantwell estimates that the refund will make all but the wealthiest 20% of the U.S. whole. Additionally, the Clear Act does not have any of the refunds going to businesses, commerce, or industry.
The remaining 25% of the auction’s proceeds will be placed in a Clean Energy Reinvestment Trust Fund (“CERT”), designed to accelerate and ease the transmission to a robust U.S. green economy. Specifically, these proceeds will go towards clean energy research and help develop, among other projects, areas that increase energy efficiency, support residential fuel switching, and reduce or sequester GHG emissions both domestically and internationally. Additionally, the Clear Act targets region-specific areas that are experiencing the greatest economic dislocations due to efforts to reduce GHG emissions and address climate change.
The full text of the Clear Act is available at http://cantwell.senate.gov/issues/CLEAR%20Act%20-%20Leg%20Text.pdf while additional materials of the bill can be found on Senator Cantwell’s website at http://cantwell.senate.gov/issues/CLEARAct.cfm.