Following the Carbon Emissions Money

The Kerry-Lieberman (and maybe -Graham) American Power Act does more than cap carbon emissions. In a cap-and-trade world, carbon emissions equal money. And, however you feel about it, money, dear reader, not the planet, is what makes the whole program relevant. So what does the APA propose to do with the money from the carbon emissions permits?

Well, the APA, in a fit of un-Senatorial humility doesn't actually allocate money since it's impossible to know what a carbon emissions permit may be worth over the 37 years of the program. So the APA actually allocates carbon emissions to various purposes. These are odd units to distribute, but it actually makes sense.

The people at Sightline, a regional Pacific Northwest think tank, parsed the APA and came up with the following distribution of benefits from the sale of carbon emissions permits.

• Consumer Benefits 68% of the carbon emissions allocations go to direct consumer benefits to address any cost of energy increases - ratepayer insulation, low-income households subsidies, and universal rebates.
  
  

• Deficit Reduction 10% of the carbon emissions allocations go to Federal deficit reduction. Justifiably so, I think, given that so much of our deficit stems from fighting wars defending or resulting from our oil addiction.
  
  

• Industry Benefits 9% goes to industrial energy efficiency programs, industrial transition programs, and some oil industry give-aways. ("Bully" on the first two, "oh well" on the third.)
  
  

• Other The remaining 13% goes to Transportation Projects, Carbon Capture and Storage Technology Development, Clean Energy Technology, and, well, Miscellaneous in that order.
  
  

Overall, this is actually a pretty good list in my opinion. My biggest fear when it comes to divvying up the revenue from carbon emissions caps is that it will be used for unrelated, but necessary expenses such as education or Veterans Administration. Not that these expenses aren't worthy, but funding them from carbon emissions allocations makes it hard to really clamp down on carbon emissions because if you do, you lose funding for these programs. (And, of course, that 10% for Deficit Reduction may actually go that way, but at least it's not a direct allocation.)

So putting the money into programs that first of all ease the transition for consumers, and then make further transition possible, is really the wisest path. So at least this part of the Kerry-Lieberman (and maybe -Graham) APA is on target.

The greater problem remains, however. The APA is so complex, so riven with loopholes and give-aways, so undemanding in goal that its ultimate effectiveness has to be seriously questioned.

Paul Birkeland lives in Seattle, WA, US, and develops Strategic Energy Management Systems for government, commercial, and industrial organizations through Integrated Renewable Energy.