Last Best Chance for Climate Legislation Before 2013?

04/19/2010 05:12 am ET Updated May 25, 2011

The climate change bill that passed the House last summer looks likely to die in the Senate. So, with the political machinery in Washington grinding to a halt, and an upcoming mid-term election cycle that looks bad for Democrats, is climate change legislation dead for the foreseeable future?

Maybe not. A sleeper bill by Senators Cantwell and Collins that places a cap on carbon, auctions permits, and puts a check into every American's pocket has been picking up steam (see positive editorials in the Economist, Washington Post, and Denver Post). It might just strike the right balance of job creation, simplicity, and populism to take off.

There are several reasons why this bill is a smart way to reduce our dependence on polluting emissions. First, it is a market-based approach--the cap ensures we get the emissions reductions we need, but businesses are free to achieve those reductions the way that works best for them. Companies aren't burdened by the government dictating how they must comply, and the strong economic signal will help generate innovation, investment and jobs rather than red tape.

Second, economists agree that auctioning pollution credits under a cap is more efficient than giving them to polluters for free. Rather than picking winners and losers before the game even starts, this bill sets a level playing field.

Third, auctioning the credits means returning the money to American families. The vast majority of the revenue raised from the auction will be divided up equally and returned to households in a monthly check. The refund they get will be bigger than the new energy costs that will inevitably come as companies pay more to pollute.

Finally, and in this political climate most importantly, the Cantwell-Collins approach is transparent, simple, and cuts out the special interests that are the object of (legitimate) populist backlash. The bill is short (less than 40 pages), has a straightforward mechanism to cut emissions, rather than a labyrinth set of policies that very few can decipher, and can be monitored by every American to see exactly who is getting what for how much.

It is clear that the United States needs to move away from polluting fuels, and do so in a way that creates jobs for American workers. The cap, auction, and refund minimize the total cost to the American economy, because it does not dull price signals through convoluted giveaways, pass-throughs, or freebies. This keeps costs down by giving everyone the incentive to take advantage of the cheapest tools available to reduce energy use or clean up energy production.

Our reliance on fossil fuels imposes a complex set of environmental and economic problems: national security threats; rising sea levels that will raise our insurance premiums; and droughts that could threaten our food supply. Tackling these problems will require ingenuity, hard work, and foresight on both sides of the aisle and from all corners of our country. We cannot put off dealing with these issues because politicians in Washington want to close their ears and pretend they aren't happening.

But with problems this complicated, and skepticism of the American public this deep, we need to simplify the solutions. By cutting out the special interest, and focusing on the public interest, the Cantwell-Collins approach gives Senators from both parties, representing states as diverse as Washington and Maine, a reason to come together. If we want climate change legislation in the near future, it may be time for the rest of us to join the bandwagon.