THE CARBON LIMITS AND ENERGY FOR AMERICA’S RENEWAL (CLEAR) ACT:
How the CLEAR Act Works:
Beginning in 2012, the President sets the initial target amount of carbon from fossil fuels
that can be emitted to the atmosphere without disrupting the economy, using a gradually
declining “cap.” The concept is to gradually accelerate emission reductions.
Revenue generated by carbon permits comes from producers and importers of coal, natural
gas and oil. In other words, a power plant that burns coal does not buy carbon permits; it is
paid by the mining company that mined the coal.
Carbon permit prices will be determined by the bidding process among fossil fuel
companies participating in monthly auctions. Only entities with a compliance obligation are
eligible to participate in auctions—no Wall Street traders or speculators are allowed in.
To minimize price volatility for consumers, fuel producers, and investors in new energy
technologies, a price collar governs carbon permit prices.
75% of auction revenues are given back to consumers directly each month on an equal per
capita basis to offset energy cost increases.
o Average annual refunds for a family of four are estimated to be approximately
$1000.
o Sending auction revenues directly to consumers means 80% of the American public
will incur no net costs and the lowest income population will receive net positive
benefits. The remaining 20% percent – the highest income earners—will see less
than a 0.3% decrease in income.
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