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Cap-and-Trade Does More Harm than Good

Bill offers incentives for businesses that pollute. Carbon fees or taxation would be better for the economy and the Earth

by Laurie Williams & Allan Zabel

We would support legislation in Congress to address climate change if it were capable of accomplishing that goal. Unfortunately, despite the best intentions of its proponents, the bill known as Waxman-Markey would disable our ability to reduce greenhouse-gas emissions for at least a decade, hugely increasing the risk of irreversible climate calamity.

We are speaking as individuals based on our more than 20 years of experience as public-sector environmental-enforcement attorneys, including extensive experience in California with the sort of cap-and-trade program now being proposed in Washington. But don't take our word for it; look at the record.

Cap-and-trade programs have often failed. For example, a Los Angeles cap-and-trade program designed to reduce ground-level ozone ended up issuing permits for more pollution than was actually being emitted. It took more than five years for the "cap" to be ratcheted below pollution levels, whereupon the price of permits skyrocketed and utilities threatened rolling blackouts. Cap-and-trade had produced little besides delay.

In Europe, cap-and-trade has failed to deliver on climate change. It yielded windfall profits for utilities, but few reductions in emissions or investments in clean technology.

While U.S. officials vowed to learn from Europe's mistakes, the bill sponsored by Reps. Henry Waxman (D., Calif.) and Edward Markey (D., Mass.) has many of the same flaws and adds massive "offsets" that blow away the "cap" in "cap-and-trade." Offsets allow polluters to, for example, pay to preserve an acre of forest so they can continue burning coal above the cap. The concept's problems are legion and well-documented.

First, in our forestry example, the amount and permanency of the environmental benefit is difficult to measure and enforce, especially if it occurs outside the United States. Second, it is never clear whether an offset results in an added benefit. Unless market demand is reduced, logging will merely shift elsewhere.

Waxman-Markey would allow almost 20 years of cheap, essentially fraudulent offsets to meet all required reductions in pollution. They would be counted as environmental progress on paper while allowing degradation in reality.

They would also create entrenched interests enriched by an expanded carbon-offset industry. They, along with those who would profit from the bill's permits to pollute, would vigorously fight reform even after the system's flaws became obvious.

Waxman-Markey proponents have cited the success of the Environmental Protection Agency's acid-rain cap-and-trade program (with no offsets). But they ignore huge differences between the acid-rain and climate-change challenges.

In the acid-rain program, the EPA shepherded a few hundred existing coal-fired power plants through a relatively manageable switch from high-sulfur coal to readily available and affordable low-sulfur coal. Some facilities with large reserves of high-sulfur coal added scrubbers, an existing technology.

In the case of climate change, however, we are not simply modifying the operation of a relatively small number of existing facilities. We need to create strong incentives to increase energy efficiency throughout the economy and to invest in new clean-energy infrastructure. Cap-and-trade is an ineffective tool for that, because it does not reliably end fossil fuels' price advantage.

The Waxman-Markey approach would not only guarantee a decades-long failure in the United States; it would also undermine U.S. credibility in international negotiations on climate change.

Those who favor Waxman-Markey as a political best-case scenario lack faith in the American people. We believe the American people can understand and support a more effective and fair approach.

Many observers across the political spectrum agree that carbon fees or taxes, with rebates to consumers, would be a more enforceable and effective alternative. While cap-and-trade-and-offsets will enrich special interests and delay the transition away from fossil fuels, carbon fees with monthly rebates could be the centerpiece of an affordable, equitable, rapid transition to a clean-energy future.

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