Friday, June 26, 2009

If all goes according to plan, the House will vote today on Waxman-Markey, a mammoth bill that would tackle climate change. After eight years of inaction on global warming, the will to legislate should be celebrated. So should the stated goal: limiting pollution by capping greenhouse gas emissions and putting a price on carbon. But that's about as far as our enthusiasm goes.

Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) have toiled for months to produce legislation that would mark the first of many steps leading to a carbon-constrained economy -- and that would also get votes. The result is a 1,201-page measure filled with political compromises, directives, subsidies and selections of winners and losers that most members won't be able to analyze before the vote and that leaves us wondering how effective it will be.

Waxman-Markey would mandate a 17 percent reduction in greenhouse gas emissions by 2020 and 83 percent by 2050 from 2005 levels. This is weaker than what the Intergovernmental Panel on Climate Change calls for but a lot better than nothing. The government would set a cap on the amount of carbon dioxide that could be emitted and would issue allowances to polluting sectors that could buy and sell those rights.

This complex system has some theoretical advantages over our preferred alternative -- a straightforward, easily understood carbon tax -- but it could be vulnerable to manipulation that would compromise its effect. Already pollution credits and their revenue are being divvied up to the advantage of polluters. During the campaign, President Obama supported the cleanest variation of this mechanism: selling all emission allowances at auction. This week he abandoned that sensible stance with a full-throated endorsement of Waxman-Markey, which gives away 85 percent of the pollution credits in the first years of the program and provides many avenues potentially to evade compliance. While in theory the bill relies on the market to find the most efficient alternatives to greenhouse-gas emitting energy sources, in practice its subsidies, regulations and exemptions could skew the outcome in costly ways.

Even if it passes today, Waxman-Markey is just a first step. With a flood of amendments to the House bill expected today and fierce battles to come in the Senate, the debate over how to design this fundamental shift in the American economy remains wide open. It's not too late to hope for a cleaner cap-and-trade bill -- such proposals are circulating on Capitol Hill -- or a properly designed carbon tax that would send the right market signal to spur green-energy innovation while also leading to vital changes in behavior.

We're not ignorant of political realities, and we don't believe the perfect should become the enemy of the good. Congress should deliver a bill to Mr. Obama this year. But given that congressional action could set a template for years or decades, we think it's too soon to settle for something that falls so far short of ideal.

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