The Obama Cap and Trade Debate Rages On


Photo via Cleveland

Nobody thought this was going to be easy—how to best launch a carbon cap and trade system is one of the most contentious issues on the table right now. And predictably, things are already getting messy. 28 senators have already protested the cap and trade being included in the national budget. Now a chorus of voices is rising to oppose just about every aspect of Obama's proposed cap and trade system. Here's what's being said—rather, yelled about the great effort to curb carbon emissions.O, where to begin?

Obama's cap and trade, as it stands, would generate $645 billion in revenue over the next ten years. It would accomplish this by auctioning off %100 of the carbon permits to polluting companies—instead of giving a portion away for free, as the European cap and trade did. And it wouldn't be cheap: (all quotes from Bloomberg)

"U.S. utilities released 2.4 billion tons of carbon dioxide in 2007, Department of Energy data show. Buying allowances for all of that pollution would cost $39 billion, using March 18 permit prices on London's European Climate Exchange."

Guess who doesn't like that?

"Don't Call it a Cap and Trade!"
This has become the opposition's catchphrase—everyone from perpetual-thorn-in-environmentalists-side John Boehner to electric company execs are using the phrase to exclaim their protest:

"It was wrong-headed thinking," said Michael Morris, chief executive officer of American Electric Power Co., the biggest U.S. electricity producer from coal. "Don't call it cap-and-trade when it's really a tax."

What, the CEO of the biggest coal burning company in the US has a problem with paying for his emissions? Shocking. And Mr. Boehner, whatever do you think?
"Let's just be honest and call it a carbon tax that will increase taxes on all Americans who drive a car, who have a job, who turn on a light switch, pure and simple," House Republican Leader John Boehner said.

Looks like Boehner is going to lose the bike-riding, jobless darkness-lover vote.

Cap and Trade Debate is Just Getting Started
But coal fat cats and Republican leaders aren't the only ones who've taken issue with the bill. After all:

"There will be a big battle over just about everything with this," said Dan Weiss, climate strategy director at the Center for American Progress, a policy group in Washington that advises Democrats. "The companies that shoot their pollution into the sky for free don't want to have to start to pay for it."

Harry Reid and Nancy Pelosi want to pass legislation for a cap and trade this year. But even many Democrats have issues with the bill. A main concern is that auctioning off all the permits would force coal burning companies to raise their prices, which would hurt low and middle income families the hardest. Obama has said that he'd use much of the revenue to give tax cuts to balance out the cost, and then some.

Other Voices on Cap and Trade
Here's a sampling of some of the other arguments and ideas thrown into the Great Cap and Trade Debate:

While any climate-change plan carries costs, the revenue "shouldn't be used to fund other government programs," said Utah Representative Jim Matheson. He leads an energy task force of the Blue Dog Coalition, a group of Democrats who favor low taxes and limits on government spending.

He doesn't say why not.
Duke Energy CEO James Rogers said consumers in parts of the country, such as the industrial Midwest, depend on coal more than residents of coastal states like California. Auctioning all carbon permits would raise utility costs on some Americans to finance tax cuts for others, he said.

Hm.

-"There needs to be a substantial burden on anyone who would claim a right to an allowance without buying it at auction," New Mexico's Democratic Senator Jeff Bingaman, said.

-"Still, Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, said legislation will have to ease the transition costs of carbon restrictions to get through Congress. "I find it unlikely that climate-change legislation will pass that doesn't have some allocations reserved for especially hard-hit industries."

And now let's hear from the Chief himself:
At the other extreme, giving away all permits "doesn't work," Obama told CEOs at a meeting.

He's right—the European Cap and Trade initially gave out free permits, and polluting companies actually ended up making windfall profits.
And finally, let's end on a note from CA rep Jane Harman:
"I want to get a viable cap-and-trade system yesterday and that's going to require a lot of coalition building," Harman said in an interview. "Otherwise it doesn't happen."

Whew. So that's (a very, very abridged synopsis of) where the debate over Obama's cap and trade system stands today: it's a big, sloppy, political mess.

More on Obama's Cap and Trade
Hey Obama - Check Out the Carbon Cap and Trade Already Up and Running in Your Own Backyard
Obama Calls for Cap-and-Trade
Change: Focus on Focus Earth: Cap and Trade Delay

Tags: Air Pollution | Barack Obama | Carbon Dioxide | Carbon Emissions | Economics