As the Senate apparently considers eliminating “cap and trade” from the energy bill, the Washington Post comes out in favor of a carbon tax instead:
The House barely passed the American Clean Energy and Security Act (a.k.a. Waxman-Markey) in June. The 1,400-page bill has a potpourri of measures ranging from new efficiency and renewable energy standards to a cap-and-trade provision that gives away 85 percent of the pollution allowances to various interests. The Senate is proving to be a much tougher sell. Last week, four Democratic senators — Blanche Lincoln (Ark.), Ben Nelson (Neb.), Kent Conrad (N.D.) and Byron L. Dorgan (N.D.) — called on the leadership to strip cap-and-trade completely from the bill that Majority Leader Harry M. Reid (D-Nev.) hopes to start stitching together next month. This comes days after 10 moderate Democratic senators from coal and manufacturing states sent a letter to President Obama warning that they would not go along with any cap-and-trade regime that didn’t “maintain a level playing field for American manufacturing.”
Dropping cap-and-trade from the Senate bill is considered a non-starter by Mr. Reid and environmental advocates for two reasons. First, a long-stated goal of congressional leaders and the president himself is to have emissions-limiting legislation passed and signed into law in time for international climate talks in Copenhagen in December. Second, there is no Plan B. The leadership has put all of its eggs in the cap-and-trade basket.
Yet there are other options worthy of consideration. Yes, we’re talking about a carbon tax. It would be relatively simple to devise and easy to implement. It would require no new bureaucracy, and the revenue generated could be rebated to the taxpayer in any number of ways — through a payroll tax reduction, for instance.
I have long favored a carbon tax, originally to encourage efficiency, then for geopolitical reasons and I’ve been skeptical of a “cap and trade” system. Although its proponents claim that such a system could be made to work here, the experience with it in Europe is decidedly mixed.
A carbon tax could be made to work here, too, and without the bureaucracy or the likelihood of political finagling. Majority Leader Reid’s insistence on “cap and trade” has made opponents of reform wonder whether the bureaucracy and the political finagling are the true objective of the energy bill rather than reduction of emissions. “Cap and trade” isn’t the only game in town for reducing emissions but it is the approach that will produce the greatest political spoils.
