More on Can Climate Plan Work?

In an earlier post, Caps, Trades and Offsets: Can Climate Plan Work?, I talked about a recent Washington Post article that introduces the Waxman-Markey climate change legislation, a.k.a. the American Clean Energy and Security (ACES) Act of 2009, which is being considered in the House of Representatives. As the Post article says, the bill would "make those who use gas or electricity pay for their share of the emissions that result."

This would be done through a cap-and-trade system on carbon dioxide and the other greenhouse gases, byproducts of burning fossil fuels, that are threatening to overheat our planet. Certain companies that are the most responsible, directly or indirectly, for emitting greenhouse gases would have to buy allowances, on the open market, that they would then use to cover these emissions. The total number of allowances (the "cap") would represent the total amount of emissions allowed per year. This amount would be reduced year by year.

At the time I made that earlier post, I knew little about cap and trade. Now I know a bit more.

For instance, I know that ACES is only somewhat a "jobs bill," as Capitol Hill Democrats are calling it, because although it would create some so-called "green-energy jobs," it would threaten other jobs that now exist in "dirty energy": coal, oil, and natural gas, and all the things that depend on burning them (including much of the electricity generated in this country). There would be winners and losers, jobs-wise.

Republicans that call ACES a "light-switch tax," for their part, ignore the fact that changing over to alternative energy sources — wind, solar, geothermal, nuclear, and the like — would one day let us turn on our light switches tax-free, as we do now.

Like any cap-and-trade system, I have furthermore learned, ACES has the potential to burden us with a higher cost of living ... until such time as conservation, efficiency measures, and innovations in clean energy bring costs down again. And those burdens would fall heaviest on those with the lowest incomes, unless "a consumer assistance section" is added, as promised, to the legislation. (A quick, and somewhat out-of-date, summary of ACES is available here.)

I have also learned that the criticism quoted in the Post article to the effect that "giving all the pollution credits away" — credits and allowances are the same thing — rather than auctioning them off to the highest bidders would not, as Greenpeace spokesman Michael Crocker said, fail to "serve the market principle of making carbon have a cost." Even freebie credits would wind up being traded in a marketplace — this is the "trade" part of "cap and trade" — and have their price determined by the forces of supply and demand. So carbon would still "have a cost." (That is so, and also it is so that Waxman-Markey as currently envisioned would sell 15 percent of the allowances, while giving away 85 percent.)

"The bill's complexity," the article goes on, "led one Republican to cite the adage that a camel is a horse designed by a congressional committee." Fair enough, but this is a complex feat we are trying to engineer, and we need a camel. Cutting greenhouse gas emissions isn't going to happen all by itself. What would the Republicans prefer? A straight-up carbon tax? That's just as much of a "light-switch tax" as cap and trade, and it doesn't let the "trade" part of the system reallocate where cost burdens fall, as a way of seeking market efficiencies. That amounts to a camel with a pronounced limp.

Would the Republicans prefer a higher tax on gasoline to cap and trade? It would violate their vaunted aversion to taxes and be at least as regressive (harmful to lower-income pocketbooks) as cap and trade.

What about having simply having the government mandate that certain percentages of energy production have to come from alternative energy sources? Again, core Republican axioms would vehemently oppose it.

Or, perhaps the Republicans would just do nothing. If that happens and key coastal congressional districts wind up partly under water due to global warming, or mountain snowpacks in the West vanish, leading to a dearth of snowmelt, drinking water, farmland irrigation, and power from hydroelectric dams, will they shoulder the blame?