An economy-wide cap on climate warming emissions -- our preferred climate policy -- has one enormous sticking point: once the cap is in place, who gets the right to pollute?
That's the core of the debate over the "allocation" of emissions permits. Literally billions of dollars are at stake. And not too surprisingly, just about every industry you can think of believes that, once strict emissions limits are imposed, they should get a generous slice of permits for free.
Much of this is just money-grubbing, plain and simple. Permits will have a market value, so giving away permits is a lot like giving away free money. Free permits will mean big windfall profits to large emitters -- an idea that shareholders and execs love, but consumers and taxpayers should hate.
But in some cases, the arguments against free emissions permits aren't so clear-cut. In much of the U.S. West, for example, investor-owned electric utilities can't set their own prices; instead, their rates are set by public utility commissions.
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