Cap and Trade: the compromise that never happened


A friend of mine mentioned “Cap and Trade” a few weeks ago and I’ve been trying to figure out the latest news on the subject.  Boy, there sure is a lot of information out there!  If you need a refresher on what Cap and Trade  entails,  check out Sightline’s Cap and Trade 101.   As Sightline explains it, the “cap” is a legal limit on the quantity of greenhouse gases that a region can emit each year and “trade” means that companies may swap among themselves  the permission – or permits – to emit greenhouse gases.

“Cap and trade commits us to responsible limits on global warming emissions and gradually steps down those limits  over time. Setting commonsense rules, cap and trade sparks the competitiveness and ingenuity of the marketplace to reduce emissions as smoothly, efficiently, and cost-effectively possible.”

– Cap and Trade 101

Well, that sounds nice, but not everyone sees it that way.  A lot of economists are worried about the volatility this kind of trading would introduce to the market, making risk management difficult.  (Cap and Trade and Risk Management).  Others are worried about an increase in gas, oil, and coal prices that will be passed on to consumers.  And still others are concerned that it offers too much leeway to big industries that have a lot of influence in Washington.  Of course, a lot of these issues were addressed in the Waxman-Markey Bill that was introduced in Congress in 2009.  The bill would cap carbon emissions at 17 percent below 2005 levels by 2020, gradually lowering the cap to 83 percent below 2005 levels by 2050. It was the most comprehensive energy bill to be introduced in a generation complete with built-in protections for energy consumers.  So what happened?  The bill made it through the House intact but will probably never become a law.  Basically, Big oil and gas companies thought it was asking too much and environmentalist groups didn’t think it was enough.  Sounds like a great compromise to me.  But then you get all those lobbyists involved, provisions are made, and nothing gets through.

As the New York Times puts it, “Why did cap and trade die? The short answer is that it was done in by the weak economy, the Wall Street meltdown, determined industry opposition and its own complexity.”

So where are we now?  It seems like Cap and Trade has become a dirty phrase in political circles these days.  There have been other attempts at legislation that are similar in nature, but they tend to all get the boot, as demonstrated by this article in The American.

So here’s what I think:

I think there needs to be better regulation and charge on pollution.  It’s high time those big polluters paid for the externalities they’ve been pushing on the rest of us.  After all, most businesses aren’t socially responsible enough to fork out the money to implement new technologies and cut back on pollution without some kind of incentive and the only entity with that kind of power is the government.  A cap and trade policy has already been used  to cut down on sulfur dioxide and nitrogen oxides in an effort to combat acid rain.  It appears to have worked.  So why can’t we do that again?  In order to really make a difference any Cap and Trade law would have to have a stringent cap, high priced permits, stiff punishments for cheaters and no exceptions!  Sounds good.  Maybe I should be a congresswoman and write a bill.  But we all know it won’t go anywhere.  Any emissions bill that gets passed is going to have to be a compromise for both sides.  We have to start somewhere. Obviously there are all things we can do individually to reduce our personal carbon emissions or our “carbon footprint” but the biggest changes need to happen at the major sources. (see the EPA’s charts.)  For example, I can turn off the lights and unplug appliances when I’m not using them.  But wouldn’t it be much better if my electricity was being generated by wind in the first place? I know this seems like a no brainer, but when my local university tried to build a wind turbine in the mouth of a canyon, the rest of the city threw a fit.  I’m sure not every town is this silly, environmentally speaking, but this is the kind of thinking that kills progress.

So…. enough ranting.  Stay informed.  Vote!   And let your congressmen know what is really important to you.

What do you think?  Which are our best options?


2 responses »

  1. Great post Em! Really got me thinking and my ranting juices flowing! 🙂 I think people need to learn how to compromise! Uh, myself included. But seriously, if all the politicians do is just butt heads and say- We’re holding out till we get everything we want- NO ONE WINS. I think it would be great if we could regulate big polluters with a cap and trade, but any step in the right direction would be welcome!

  2. Thanks, Em, for keeping me educated – I’m writing my congressman, first chance I get! (I know, I know – the road to hell….)

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