The Coming Cap and Trade Debate

Obama really laid it down last night, no? He clearly said that even with the economy crushed, he wants a cap and trade bill to cut greenhouse gases this year. I know it's a campaign promise and all, but I seriously wouldn't have been surprised to see some de-emphasizing of this priority in light of the current financial situation.

I've done a major article about the prospects for a cap and trade bill that's coming out soon, and don't want to tip my hand yet, but suffice it to say--this is going to be a hell of a battle. A lot of senators are going to be very worried about the economy, and hard to convince to get on board with a bill that will raise energy costs. But at the same time, Obama or the bill's proponents can structure it so that the cap actually gives back to citizens in the form of "dividends," and that could be quite popular.

In short, it's a huge political risk to try to pull off cap and trade this year--yet really ingenious policymaking might just manage to make it possible. What do people think: Is Obama nuts, or can we really pass cap-and-trade legislation in 2009?

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We have to be practical about expectations. I'd rather see reasonable legislation pass, than hold out for the perfect bill that Washington cannot agree on. Congress--and the rest of us--need to move on cap and trade now because we'll suffer most by inaction. This will require members (and their staffers) to rise above petty partisan decisions and environmental advocacy groups to recognize that an adequate bill may not be ideal, but would be progress.

A bill is one thing, and immediate implementation is another. Like most such, Congress can postpone the pain indefinitely.

A lot of senators are going to be very worried about the economy, and hard to convince to get on board with a bill that will raise energy costs.

Especially since the pocketbook hit to consumers will mostly go to private businesses instead of the Treasury. However, that's the way things are done now; rather than pay taxes on oil to the United States government we pay it to the House of Saud.

By D. C. Sessions (not verified) on 25 Feb 2009 #permalink

cap & trade seems plausible, but you're right to point out (a) that it's a huge risk and (b, from sheril) that the answer is going to have to be pragmatic consensus legislation if it's going to move at all, especially in days like these.

what i can't believe is that we missed the big supply-side (as in cars, not CO2) opportunity we had with detroit in the early fall. when debates were happening over subsidies for the big three (or the big two, as it were), did anyone talk about nationalizing detroit and retooling (i) for quicker steps on emissions and (ii) for the transition of some auto plants to building the infrastructural and technical apparatuses this "energy economy of the future" will require?

i'm thinking mainly of the story the guys at the breakthrough institute tell about FDR nationalizing auto for the war effort and transitioning factories to produce tanks and munitions. if that's possible, wouldn't it have been possible to engineer a take-over and maintain jobs while using those facilities for building turbines/photovoltaics?

too late, it seems.

By henry cowles (not verified) on 25 Feb 2009 #permalink

If it isn't done the consequences will be dire. And Obama has more goodwill right now than anyone. This economy vs environment as opposite and mutually exclusive is false. Stimulus tied to environmentally favourable regulations can boost the economy in a green direction. If the idiots who created this economic disaster can be bailed out, why not the air we breathe?

Too late, too radical (read sensible), and remember, this was right during the very lamest of lame duckitude...when essentially we didn't have a president.

In my opinion the largest threat for California are cataclysms and ecological catastrophes. Not important is how many money we have because one tragedy can us take all.

I think that we need to slow down and at very least have an open discussion about the relative merits of the alternatives, i.e. a revenue-neutral carbon tax. It irks me that while more and more scientists, economists and opinion leaders are supporting a carbon-tax, cap and trade is being treated as a fait accompli. Even Majority Leader Reid and Secretary Chu are leaving the door open to a carbon-tax, why is the President not willing to even consider other options?

Keep your eye on Dr. Pielke.

I've noticed a push back on cap and trade in favor of a tax. Why is that? I wonder if they think the tax will be easier to roll back? Maybe they're concerned the political and economic clout that mew Democratic-leaning industries would have?

By Jon Winsor (not verified) on 26 Feb 2009 #permalink

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