Monday, February 16, 2009
THE SIX "Principles for Global Warming Legislation" released recently by Sen. Barbara Boxer (D-Calif.) were notable for what they lacked. There were no specific greenhouse gas emissions targets. There was no determination on an auction of pollution permits vs. giving some or most of them away to polluters initially. But Ms. Boxer was clear on one thing: There will be no consideration of a carbon tax. Sure, the chairman of the Environment and Public Works Committee said, "We're willing to look at everything . . . ." But she ended that declaration with ". . . but we believe cap-and-trade is the way to go."
Ms. Boxer's principles include enforceable reductions with periodic review. States and localities should be allowed to forge ahead on their own efforts to fight global warming. A transparent carbon market should be established. The proceeds generated by it would fund clean energy technology and assist the transition by consumers, manufacturers, states and localities to a clean energy economy.
Cap-and-trade regimes have advantages, notably the ability to set a limit on emissions and to integrate with other countries. But they are complex and vulnerable to lobbying and special pleading, and they do not guarantee success.
The experience of the European Union is Exhibit A. Emissions targets were set too high. Too many pollution allowances were given away to industry. The value of a carbon credit plummeted. Companies made windfall profits by charging customers more for energy while selling allowances they didn't need. And the Europeans have not had much success reducing greenhouse gas emissions. Disputes on the next round of reductions led to the creation of a two-tiered system to appease Eastern European countries fearful of the cost to their industries.
A carbon tax, by contrast, is simple and sure in its effects. Last summer, when gas prices shot up past $4 a gallon, average miles driven dropped significantly, as did energy consumption. Demand for fuel-efficient cars and overall energy efficiency skyrocketed. If high prices were the result of a gas tax, that money would have stayed in the United States rather than lining the pockets of oil-rich regimes all too happy to feed the U.S. addiction to fossil fuels. As with a cap-and-trade system, the money generated by a carbon tax could be given back to the American people.
Alluding to the climate change bill that failed in the Senate last June, Ms. Boxer said that her committee would be "starting afresh." What better way to do that than by giving a tax on carbon a fair hearing?