Wait a second, the free carbon permits aren’t going to be given away on an equal per capita basis? Let me get this straight: The plan is to give free permits to pollute to the largest historical polluters? Why? Because otherwise, these most polluting industries will fight to block the climate legislation. Is this how all policy is made? We can’t pass a health bill that doesn’t include a giveaway to insurers? Would an anti-smoking measure have a little something in it for tobacco companies? A gun law with a present for the gun manufacturers? Well, probably this is how all policy is made.

Still, the purpose of climate legislation isn’t to make power companies happy, nor is it to guarantee them a continued stream of profits. Capitalism creates and destroys: There’s no guarantee that what made a profit today will make a profit tomorrow, and there is no obligation on the part of the voting public to shore up business models that are damaging to the public good. The purpose of climate legislation should be twofold, 1) to reduce greenhouse gas emissions, and 2) to do so in a way that promotes equity.

Yes, assuming a particular overall cap on carbon, giving the permits away instead of selling them should end up with the same reduction in emissions. (To get this result, the permits would have to be fungible – that is, after they are given away or bought from the government, they can then be sold again to the highest bidder; this leads to the efficient market solution that neo-classical economists are always yammering about. The companies that can reduce their carbon emissions most cheaply will do so and sell the permits they do not need to companies for whom it would cost more to reduce emissions.)

But here’s what would be different: If the government sells the permits, that revenue can go to reduce taxes, or support green jobs, or send a dividend check to every citizen. If the government gives away the permits to private companies, the value of the right to pollute the atmosphere (which, as I’ve mentioned, belongs to every global citizen on an equal per capita basis) ends up going to the same malefactors that have been getting this windfall for decades.

Personally, I don’t think that having made a profit in the past gives you some sort of “God-given” right to make a profit in the future, whether the public likes your product (or your way of doing business) or not. And I don’t think that U.S. environmental regulations need to be business-friendly in order to be the right thing for our society to do.

The value of a clean, low-carbon-dioxide atmosphere is enormous, and it belongs to all of us, equally. I’d like to think that my Senators (this means you, John Kerry and Scott Brown) won’t be intimidated into giving it away.

This is very exciting news: The Senate’s new climate bill calls for the allocation of free carbon permits!

Now I realize this is controversial, but, personally, I can’t wait to receive mine. I couldn’t be more thrilled to have – in such a tangible form – control over my per capita right to pollute or not to pollute the atmosphere. I know it won’t be much – just one 300 millionth of the U.S. cap on emissions, but it still means a lot to me.

I’ll have to think carefully about how to use it. Naturally, I have a strong inclination to retire the permit (take it out of circulation); maybe I could make it into a nice papier maché art object to hand down to my grandchildren and great-grandchildren. A small souvenir of a good and important choice. I can only imagine that they’ll be grateful.

I suppose that power companies and other big greenhouse gas polluters will soon be knocking on my door wanting to buy my permit. Well, they better be willing to pay top dollar, because it’s going to take a lot (the true social cost of carbon?) to get me to part with it.

* Warning: This blog posting contains sarcasm. The Senate’s free carbon permits are not really for you and me; they’re for power companies. Stay tuned for more on this topic.

With the Waxman-Markey cap-and-trade bill faltering, the lesser-known Cantwell-Collins cap-and-dividend bill is gaining traction as a more politically viable approach to climate protection legislation.

Sponsored by U.S. Senators Maria Cantwell (D-Wash.) and Susan Collins (R-Maine), the measure brings a concept into the mainstream that economists have discussed for a few years now. The main provisions:

•  It would place an absolute annual cap on carbon emissions for the United States as a whole. This cap could and should be a lot lower, but it’s a start.

•  It would require aspiring polluters to bid for a limited number of auctioned “carbon permits.” (In many of the previous climate bills kicked around Congress, these permits were simply given away to the biggest historical polluters.)

•  It would return three-quarters of the auction revenue, on an equal per capita basis, to all U.S. residents in the form of an annual dividend check. These dividends have been estimated on the order of $1,000 per person every year.

•  It would invest the remaining one-quarter of revenues in clean energy research, assistance to workers put at a special disadvantage by emissions reductions, and the like.

Research from the Political Economy Research Institute at the University of Massachusetts-Amherst shows that for all but the richest U.S. families, these benefit checks would more than compensate for increased energy costs (see a series of studies by Boyce and Riddle: a state-by-state analysis, “keeping the government whole,” and impacts by income level).

Even The Economist gives Cantwell-Collins a rave review. Yes, it’s the “free market” solution, or at least the solution some free-market types like to hype that way. But even for economists who find the “free” market to be tiresomely overrated (I’ll take a domesticated market over a feral one any day), Cantwell-Collins looks like a great first step towards an adequate U.S. climate policy. While I’m not at all convinced that dividends are the only way to use carbon revenues well, this is light-years ahead of the “giveaways” in cap-and-trade policies that are essentially a handout to big business.

Is it too optimistic to hope that the populist sensibility of cap and dividend (checks for everyone!) will create a badly needed bridge across the chasm between center (often mistakenly called “left”) and right in Congress?

For more on cap and dividend in general and Cantwell-Collins in particular, see this terrific series of theREALnews interviews with Jim Boyce.