1
Office of Senator Maria Cantwell
December 10, 2009
THE CLEAR ACT: A CAP & REFUND APPROACH TO ENERGY INDEPENDENCE AND
CLIMATE CHANGE MITIGATION
The Carbon Limits and Energy for America’s Renewal (CLEAR) Act offers an attractive and
effective climate policy alternative to traditional cap-and-trade or carbon tax policies.
While these latter options have received significant attention from economists and
policy makers, each has significant drawbacks that limit their effectiveness and political
viability. Since climate policy impacts all economic sectors over a long period, getting the
policy right the first time is essential. A flawed approach could impose significant and
unnecessary costs and prevent America from realizing a tremendous economic and job
creation opportunity and becoming a leader in the largest market of the 21st century.
Simplicity, transparency, and equity are the hallmarks of the CLEAR Act. 39 pages of
legislative text combines novel design elements, including an upstream cap on fossil carbon
as it enters the economy, a one hundred percent auction open only to energy producers
and importers (and not Wall Street) with prices set by the market within a bounded price
collar, and equal monthly distribution of auction revenues to every American. Funding is
also dedicated to climate related needs such as clean energy R&D, programs that mitigate
non-CO2 greenhouse gas emissions, and needs-based, regionally-specific assistance for
communities and workers transitioning to a clean energy economy. The CLEAR Act’s
upstream cap on fossil carbon declines gradually at a predictable rate, providing fossil fuel
users certainty while reducing greenhouse gas emissions by 20% by 2020, 30% by 2025,
42% by 2030, and 83% by 2050 without relying on free allowances to industry, unverifiable
offsets, or other giveaways.
Collectively these features empower consumers and maximize market mechanisms to
achieve least-cost, scientifically-based carbon emissions reductio