Forget 'cap and trade'
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It's a scary economy we're living in. People are worried about putting food on the table, making this month's rent or mortgage payment, and hoping just maybe they'll have a little extra cash to see a movie this weekend.
Given our economic situation, President Barack Obama's aspiration to reduce greenhouse gas emissions through a carbon cap-and-trade system is misplaced. Focusing on jobs and economic recovery should be priority No. 1.
The state of the environment is not something to take lightly. My enthusiasm for environmental stewardship goes back to my college days when I started my campus' first recycling program. This sophisticated effort involved me sifting through classroom trash and taking the recyclables to a recycling plant. And now, as a father, I want my daughter to grow up breathing clean air and not worrying about pollution.
So agreed, we need to address carbon emissions, but a cap-and-trade system where the federal government sells a capped number of credits for emitting greenhouse gases (chiefly carbon dioxide) is the wrong way to go. For the most part, the problems begin when we get to the "trade" part of cap and trade.
All those carbon emission credits could be bought and sold among companies in a complex market run by the same Wall Street speculators at the root of our current economic blight. Such a market would handle millions of trades a day, in a system so complicated it would make hedge-fund speculation seem like simple barter. A cap-and-trade market would be ripe for manipulation by inside players. Prices of emissions credits could be cranked up or down for quick profits -- leading to violent swings in energy prices.
While a cap-and-trade market is too huge and complex for meaningful government safeguards, taxpayers would be stuck footing the bill to create a new bureaucracy to regulate it. In practice, cap-and-trade systems also come down hard on coal-dependent states like ours.
But by far the biggest weakness of cap and trade is that it simply doesn't cut greenhouse gas emissions -- as our friends in the European Union have discovered.
If we want to lower greenhouse gas emissions, and it seems clear by now that America does, there are simpler, more effective ways to accomplish this.
Conservation is one, and Pennsylvania already has a head start. For obvious reasons, our state is aggressively exploring clean-coal technology. And we're right up there with California and New Jersey in supporting tighter limits on motor-vehicle exhaust, which accounts for one third of Pennsylvania's air pollution.
The supposed benefit of cap and trade is that it would apply a financial sanction to carbon emissions and encourage industries to invest in "green" energy and cleaner forms of fossil-fuel use. That benefit would be much better delivered by a straightforward tax on all carbon emissions.
A carbon tax is simple -- it applies a set fee per each ton of carbon dioxide a company emits. The tax could be set up almost immediately -- without creating a new trading market or regulatory agency.
Additionally, the carbon tax concept would have 90 percent of generated revenue being returned as tax relief to the people and businesses who use the energy and pay the tax in their utility bills. (Or how about using the revenue to beef up Social Security?) The remaining 10 percent of revenue would be dedicated to climate research and clean-energy technology.
Given the state of our economy, Pennsylvania families and businesses can't afford to suffer the unacceptable costs of an expensive and ineffective cap-and-trade program. But that's not to say that other proposals to deal with climate change should be off the table. Solutions to reduce carbon emissions that don't further weaken the economy, such as a carbon tax, are where we need to shift this conversation.
So, before rushing into cap and trade, let's continue the climate-change discussion. And in the meantime, with the money we're saving by not paying for a reckless climate-change program, maybe check out a movie this weekend.
First Published April 15, 2009 12:00 am
