Cap and trade is a great market based solution for reducing carbon emissions, write David Schoenbrod and Richard Stewart in the Wall Street Journal’s editorial pages.
Unfortunately, they say, the climate bill has the market based solutions stripped out of it in favour of top down regulation.
Waxman-Markey is largely top-down regulation dressed in cap-and-trade clothing. It purports to set a cap on greenhouse gases, but the cap is so loose in the early years that through the use of cheap offsets the U.S. need not significantly reduce its fossil-fuel emissions until about 2025. Then the bill would require a nosedive in fossil-fuel emissions. This balloon mortgage pledge of big cuts later is unlikely to be kept.
The top-down directives come in three forms. First, electric utilities, auto makers and states get free allowances on the condition that they comply with regulations requiring coal sequestration, alternative energy sources, energy conservation, advanced auto technology and more. Second, many other provisions of the 1,428 page bill mandate outright regulation on subjects ranging from how electricity is generated to off-road vehicles and household lighting. Third, still other provisions provide subsidies for government-chosen technology “winners” such as alternate energy sources, plug-in vehicles and weatherization of old buildings.
…Why has the House turned its back on the cap-and-trade approach? Both parties have played to their bases so that the only way for the Democrats to pass Waxman-Markey was to buy swing votes by picking among technologies such as coal sequestration to please critical constituencies.
While the House represents constituencies, the president must keep the focus on the broad national interest. Candidate Obama’s comments on cap and trade came when asked to back up his claim that he would be a “uniter” by naming “a hot-button issue where you would be willing to buck the Democratic Party line and say, ‘You know what? Republicans have a better idea here?'” President Obama needs to lead on the principles on which he campaigned and the Republicans in the Senate need to listen. Otherwise, Congress will pass something like the House bill or, worse still, won’t legislate at all.
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