Climate Change Lessons

It's not easy going green.

PRESIDENT-ELECT Barack Obama is committed to ending the United States' inaction on global warming. He wants to reduce emissions through a cap-and-trade system. But a report from the Government Accountability Office on problems with Europe's system and the inability of climate talks in Poland last week to settle on a specific number for the "long-term global goal for emissions reductions" shows how difficult the task will be.

Mr. Obama wants to reduce greenhouse gas emissions 80 percent below 1990 levels by 2050. He would accomplish this by auctioning all of the emission allowances that would be available through a cap-and-trade system that would put an annual declining cap on the number of pollution permits. The European Union created its own cap-and-trade system in response to the 1997 Kyoto Protocol. But European experience shows that this complicated regime is no guarantee of success. The GAO report confirms that the European Union erred in its calculation of emissions and then compounded the error by giving away all of the pollution permits. The results were higher energy prices for customers and windfall profits for utilities.

The United States didn't sign Kyoto and has been roundly -- and rightly -- criticized for resisting efforts to curb greenhouse gas emissions and thwarting attempts to establish a long-term goal with specific targets. The Europeans have been the chief critics, but they've had a hard time living up to their self-righteous railings against the United States. They haven't been terribly successful at meeting their own targets. At meetings in Brussels last week, a move to auction all emissions permits starting in 2013 was resisted by Poland and other Eastern European countries worried about the impact on their industries. So a two-tiered system was created. For Eastern European utilities, there would be an auction of 30 percent of emissions allowances in 2013, going to 100 percent by 2020. The rest of the E.U. power companies would have to buy all of their pollution permits in 2013. Meanwhile, the just-concluded U.N. gathering in Poznan, Poland, failed to quantify the goal that would be the foundation for Kyoto II, which is slated to be signed next December.

To reduce greenhouse gas emissions and lessen dependence on fossil fuels, there must be a price on carbon. A cap-and-trade system is the easiest way to integrate into an international regime, but its pitfalls are legion. A gas tax would be simpler and less subject to bureaucratic manipulation and undermining by lobbying interests. It would be the easiest way to change behavior, meet emissions targets and spark the innovation that will produce the next generation of energy production that will save the planet. We hope that Mr. Obama will give this approach serious consideration as he takes up the mantle of leadership on global warming that President Bush shunned.