Peter Barnes and I had an opportunity to meet last week at a Tarrytown, NY gathering of groups to engage in a strategy conversation about cap and trade and its elegant cousin cap and dividend. Peter devised this policy approach to pricing carbon. In this video clip, Peter Barnes and I discuss the idea behind his seminal 2001 book Who Owns the Sky? When I first read that book my reaction was, "Wow, that would actually work." Imagine a global warming solution that fairly allocates the atmosphere's limited ability to absorb CO2 using a market price on carbon emissions, in a way that's simple, fair, transparent, and politically popular.

This little video clip is part of the New York Minute video blog of the site Solve Climate, a great source of news and information about climate solutions and policy debate. There has been a tremendous effort made by numerous groups over the past decade to hatch a carbon capping scheme that will actually do the job. This solution aligns with the goals that President Obama has laid out for a solution that's grounded in science, reduces carbon emissions by 80 percent by 2050, begins with 100 percent auction of the permits, and sends a huge chunk back to consumers.

Here in Obama's words are those same core principles from a July 2008 interview with Jann Wenner in Rolling Stone Magazine:

Last week, the Senate failed to pass a measure that would have strongly addressed global warming. What's your plan to get meaningful climate change legislation passed in the face of opposition by the oil, coal and auto industries and their allies in Congress?
Let's start with what we have to do. Every scientist that is serious about looking at this question will tell you that, at minimum, we've got to reduce carbon emissions by about 80 percent.

By what date?
2050. And it's not going to happen precipitously. We've got to start now and steadily ratchet down our carbon emissions.

Are you going to take the toughest of the policy approaches that have been proposed?
In order to actually get something passed, we're going to have to get the stakeholders involved and recognize, "Look, this is a painful process."

These are tough guys with billions of dollars at stake.
But look, the oil companies are still going to be making money. Here's my point: Whenever you transition to a new technology or a new way of thinking about structuring our economy, the old is going to resist the new. The key is to make the new profitable, job-generating and appealing enough that more and more people embrace the new and let go of the old. That's where government can play a role. If we institute a cap-and-trade system for carbon emissions, that's going to generate billions of dollars. Now, that's also going to mean higher electricity prices for consumers, so a huge chunk of that has to go back to consumers in the form of rebates, so they don't feel the pinch as badly. That's point number one.

Point number two is we'll put $15 billion a year into alternative energy. We want to give encouragement to existing utilities, existing energy companies, to invest in solar and wind and biodiesel. When you have a guy like T. Boone Pickens, who made his money on oil, investing in wind farms, that's how you can start getting the alignments to bring about change. On the other hand, if you think you're just going to shove this down their throats without any consideration for their economic interests - not just the big players but the workers who have jobs at risk or those who need to worry about their electricity bills - then people are going to be resistant.