The Best Idea for Reducing Global Warming

The best idea I've heard so far to deal with global warming is not a carbon tax. I can't imagine any politician calling for higher taxes affecting the middle class, or for that matter the middle class -- already squeezed by high energy prices and stagnant wages -- putting up with it.

The winning idea isn't a cap-and-trade system, either. That system would allow companies to continue polluting, just require them to buy the right to pollute more from companies that keep their dirtying to a minimum. Today's biggest polluters -- those who've done least to reduce their emissions -- would be the biggest winners because they'd get the highest caps.

The best idea I've heard is described as a carbon auction. Companies would have to bid for the right to pollute. And, most ingeniously, the money raised in the auction would be shared equally by all citizens in the form of yearly dividend checks -- just like the residents of Alaska now get yearly dividends for their share of the state's oil revenues.

I mean, it's our atmosphere, right? Think of a national park or a national forest. No company is simply allowed to take what they want from it, free of charge. Why should the atmosphere be any different? In a carbon auction, companies would have to bid against other companies for a portion of the atmosphere they intend to use -- within overall limits that reduce pollution levels.

Get it? It's a win-win. The auction market itself determines who can pollute and by how much. And since companies will inevitably want to reduce their bidding costs, they'll search for new technologies that cut their emissions. And even if companies pass on increased costs to their customers, we'll still be better off because we'll get dividend checks and cleaner air.

Message to presidential candidates: American voters will buy this one. And it's good policy.

This column is adapted from Reich's weekly commentary on American Public Radio's Marketplace.

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