Cap'n Trade would work like this. The government would require companies to obtain permits that give them the right to emit a fixed amount of greenhouse gasses. The limit on emissions (the cap) would be gradually ratcheted down over the years until the overall amount of schmutz reached some agreed-upon level. A relatively clean company could sell (trade) its unused rights to pollute to a dirtier company.Unless I'm missing something, this just isn't correct. It's true that John McCain hasn't taken a position on how to distribute permits — though his past history strongly suggests that he'll go for the "massive corporate windfall" version. But both Barack Obama and Hillary Clinton have proposed cap-and-trade systems that auction 100% of all greenhouse gas permits. This is the very thing that makes their plans noteworthy.
The candidates have not said how they would distribute these permits. But they only have two choices. The government could auction those mandatory licenses, a process which would look an awful lot like a tax....Or, Washington could give the permits away based on prior energy use, which would generate a massive corporate windfall.
A 100% auction is one of those technical details that usually gets lost in the shuffle of a presidential campaign. But it's not just a detail. It's the thing that distinguishes a real cap-and-trade plan from a fake one. Both Democrats have the beginnings of a real plan. The Republican candidate doesn't.