You have a good analysis, except for the embedded assumption that Congress should be writing what are, at bottom, detailed administrative regulations.

These are decent principles for Congress:

Maximum efficiency requires two things. First, in a given sector, you set up a system that transfers capital directly from those over-emitting to those reducing emissions, in an agnostic fashion -- that is, preferencing no particular set of technologies or practices. A ton of CO2 ought to be worth the same no matter how it is emitted or prevented, and there should be no net loss of capital in the sector (as there would be if the feds took the revenue and spent it on other things). Second, you remove existing regulatory barriers to that capital flow. As long as capital continues flowing from emitters to savers, you've got a perpetual economic motion machine.

Simplicity:

Simplicity means the system can be explained in an elevator. The further you get from simplicity, the more citizens tune out, the more politicians have license to propagandize, and the more business interests have room to game the system to their benefit.

All we really need the law to do is set the pace (targets) and specify the principle such as you've outlined, requiring the implementing agencies to write regulations to meet those goals.

There are pitfalls to this approach, of course, but there are also examples of how to avoid those pitfalls.  

Save your community: Cut greenhouse gas emissions 5% per year.

Why do you need simplicity? How many bills (good or bad) are simple?  Seems like you most need political buy-in (or else nothing is possible) and efficiency if possible.  Another factor equally important to political buy-in (and I think implied) is Scale.  The policy must be able to have a large enough effect to actually slow or stop climate change.

Simplicity is nice to have, but don't understand why it is a necessity...

Why doesn't Peter Barnes achieve all three:

Simplicity: Set emissions limit. Auction permits. divide revenue equally among public.

Political buy in - you set emissions limits, and compensate public for any (indirect) costs they will bear. High visibility benefits, low visibility costs, and when you count the benefits of emissions reductions, benefits far exceed costs.

efficiency. You have an agnostic price on emissions. You can levy upstream for fossil fuels, a bit further downstream for stuff like cement plant emissions, methane from dumps and mines, F5 gases, and black carbon. Heck, no reason you couldn't require agriculture and forestry to buy permits. Hard to measure, but that is a problem for any means of regulating forestry and agriclture.

Public as opposed to private investment? Take it form another source such as military spending or higher taxes on the rich. Don't confuse emissions limits with an investment source.

Because it doesn't provide any direct incentive for investment in GHG reduction, except to the indirect extent that prices cause behavioral shifts.  (And as we've seen with gasoline prices over the last 5 years, the demand curves for energy can be pretty inelastic.)  

Cap & Dividend is 1/2 stick and 1/2 social engineering.  Efficient GHG reduction needs two hands clapping.  Shifting payments for GHG reduction towards other goals (as in C&D) is at best only half as efficient as it could be.

David says:

First, in a given sector, you set up a system that transfers capital directly from those over-emitting to those reducing emissions, in an agnostic fashion -- that is, preferencing no particular set of technologies or practices.

Why must capital transfers occur within a sector?  Shouldn't some inefficient sectors be reduced in size while growing other, more efficient sectors?

For instance, many say it would take a tremendously high cost of carbon to influence the cost of driving.  Shouldn't driving, then, be the last sector we target?

How are we defining the "cost" of a carbon policy? The difference between GDP with the policy and GDP without (which I'm guessing is a bit tricky to nail down)? The reduction in carbon emissions may be easier to see, but I don't

I also agree with Penfold that it makes more sense to look at all sectors as a whole instead of isolating one particular sector.

I know Sean bangs the drum for direct gov't investment of auction revenue-- but I don't see it.  

 Why would we use what is, in essence, a regressive tax to raise R & D funds?  

 Why would we expect politicians to fund good green energy instead of clean coal, nuclear & corn-based ethanol?  

 Why does R & D money need to come from auction revenue--when, instead, we could just change the current subsidies or use ?  

I think a strong cap that gets us to 80% by 2050 (or more if that's what the science tells us) with a pricing mechanism (auction) will create enough profit incentive to spur massive amounts of private investment that could be supplemented by public money.  

Everyone gets that we need to invest in R & D- but where that the bulk of that money comes from  that is the question.    

AndyFrankGO: Why do you need simplicity? How many bills (good or bad) are simple?
Making this kind of legislation less cumbersome for laypersons is about as important to me as which president i'd rather have a drink with. LOL This is why we have community and trade associations, watchdog groups, etc....also why I am sticking w/ NRDC, NWF, PSR, WWF, WS, and others.

Ultimately, laypersons aren't the ones who will be responsible for implementation, monitoring, or enforcement. Why is their ability to read the legislation so important? Are you saying that we would save the average-joe-bill-reader trouble by making them sift through the bureaucratic policy and regulation that would filter down from more simplistic legislation? This is no easy grey area to talk about. One thing I know for sure, legislative specificity makes it harder for the bureaucracy to twist policies and regulations.

It is this simplicity that makes the uneducated more effective than the educated when addressing popular audiences. -- Aristotle, Rhetoric

Having worked in several state governments, thanks for the best laugh I've had in days.

"Legislative specificity" means that the lawyers in the legislative service bureaus and assisting the drafting committee in the Lege and try to put half-formed concepts into legislative-ese by anticipating the loopholes that are inevitably created and how to handle the borderline cases.  Each response lengthens the legislation and involves adding additional clarifications and distinctions, each of which invites additional lawyering over the precise intent.

State courts are increasingly dominated by neandeathal "textualists" whose claim is that courts have no business doing statutory interpretation unless the statute is so ambiguous that it can't be applied.  

The hard liners even disdain to use the "absurd results" test, which they associate with liberalism (the test says that if an interpretation of the plain language causes you to reach an absurd result, you made a mistake in your interpretation, because the Legislature does not intend to be absurd; actually, it's possible that they disdain to use this test because they prefer that government be absurd whenever possible, the better to argue for dismantling and privatizing it).

Thus, the train wreck occurs when the anti-govt sentiment illustrated by worries about "bureaucratic twisting" of laws causes laws that should be one pagers to become 14 pages plus definitions meets courts who have decided that whenever the Legislature bothered to write 14 pages they must have intentionally excluded all other ideas (there's even a legal phrase for it that appears in case after case -- the expression of one thing is the exclusion of others ... in other words, if you chose to say A, B, and C, we presume that D was intentionally excluded, no matter how reasonable and useful D would be).

Anyone who thinks that "legislative specificity" nets you less interpretation and judgments by "bureaucrats" has obviously never worked in government.  The more words the Lege uses, the more words the "bureaucrats" will have to use to apply the laws, and the more words will be open to reinterpretation and challenge by the people who are affected by the laws in question.

http://oregonpeaceworks.web.aplus.net/site/index.php?option=content&task=view&id=3110&It emid=241

Anyone who thinks that "legislative specificity" nets you less interpretation and judgments by "bureaucrats" has obviously never worked in government.
That seems a bit presumptive to me, generalizing state governments as such...

I lived in MT when the speed limit was "reasonable and prudent judgement"....now its "70". Which seems more specific to you and which leaves itself to more interpretation?