Revesz and Livermore write in BusinessWeek that President Obama's cap-and-trade plan can boost growth

Photo of Richard ReveszPhoto of Michael LivermoreIn a March 10 op-ed in BusinessWeek, Richard Revesz, the Dean and Lawrence King Professor of Law, and Michael Livermore, executive director of the Law School’s Institute for Policy Integrity, write that President Obama’s plan to cap carbon emissions achieves three goals: weaning us off fossil fuels, spurring a wave of investment and job creation, and putting cash in the pockets of Americans who most need it.

The cap-and-refund proposal puts a strict limit on pollution that causes global warming and uses a permit auction in which large companies pay for the right to pollute. To encourage efficiency, the cap increases the price of fossil-fuel-based energy. The plan would refund the revenue from auctions directly to the American people through a tax credit.

“Most carbon cap plans are set up to fail because they reward energy companies with permit giveaways and fail to compensate consumers for increased electricity bills,” Revesz and Livermore write. “Obama’s cap-and-refund plan avoids these mistakes.”

The authors note that President Obama’s proposal will create new investment incentives and get needed dollars into the hands of working Americans. As adjustments are made to a new green economy, the cap will be lowered, generating greater revenue to be distributed to the American public.

“The results of America’s fossil-fuel addiction are clear: We send billions overseas for foreign oil, muck up the environment with coal pollution, and stunt economic development,” the authors write. “Breaking that addiction will cause withdrawal symptoms for some, but it is necessary to build a cleaner, healthier economy for all.”

Revesz and Livermore are co-authors of Retaking Rationality: How Cost-Benefit Analysis Can Better Protect the Environment and Our Health, published last year by Oxford University Press.