A Clear Blue-Sky Idea

Barnes has done the crude math of a sky trust: $300 billion in revenue divided by 300 million Americans comes out to $1,000 per person, though an elaborate model prepared by the MIT Joint Program on the Science and Policy of Global Change costs it out to as much as $4,900 per year for a family of four. Every American would receive the same, depending on the rate at which carbon was assessed. By giving all Americans equal dividends, the plan would ease the extra burden that higher carbon prices would place on the poor.

According to calculations by Barnes and by James K. Boyce of the University of Massachusetts, those earning more than $160,000 a year—who have bigger cars and houses and thus use more energy—would end up paying more in energy charges than they got back in dividends. Those earning less than about $45,000 would end up paying less, and with some extra cash in their pockets. And those in between would find it roughly a wash, though about 70 percent overall would make money on the deal. The country as a whole, of course, would be much better off. The planet, too. Boyce and a pair of UMass colleagues wrote an article in Energy Policy magazine last year explaining how a sky trust could work in China.

As with any carbon tax, industries like coal and trucking would scream. But Boyce has an idea for how to make the idea more politically acceptable. He would earmark 20 to 30 percent of the revenues in the early years for “transitional adjustment assistance” to industries that could be expected to lobby fiercely against any incentives to kick the carbon habit. This would help buy them off. Other potential inequities aren’t as daunting as they seem. Those who drive the most and would be assessed the most also tend to live in low-density areas with lower cost-of-living, which means their dividend checks would go further.

A sky trust is win-win-win for the economy, the taxpayer and the environment. It uses market principles to put more money in people’s pockets and reduce pollution simultaneously. So far, it's an idea just being talked about by academics and policy wonks. Many politicians are likely to react warily, in part because they wouldn’t get their hands on all of the carbon-tax booty. But a sky trust feels ripe for a presidential candidate to grab and run with. Which one wants to save the world and give voters money at the same time?

© 2007