Senate to Debate Carbon Cap/Trade Bill

[Pangloss]

Next week the Senate will begin debating a bill brought out late last year by senators Warner and Lieberman. The bill has come under intense scrutiny already, with supporters and critics on all sides of the issue.

 

Here's the Wikipedia entry on the bill, which serves as a good starting point for inquiry:

http://en.wikipedia.org/wiki/America%27s_Climate_Security_Act_of_2007

 

In a nutshell (if I understand it correctly), the bill caps emissions across the board (industry, transportation, and even personal (home)) at 2005 levels through 2012, then forces gradual reduction at 2% per year through carbon trading.

 

The bill also provides $350 billion spread out over 25 years for assisting low-income families through carbon offsets, home efficiency modernization, etc. Also provided is another $500 billion over 25 years in "modernization" money, for use in decreasing emissions, etc.

 

Interestingly, under the plan, that money would actually come from auctions of the carbon offsets, which would not only pay for the above expenditures but, in theory, a trillion dollars in new revenue besides. (See estimate in WSJ link below.) A lot of questions surround those estimates, though. Also Senator Boxer of the People's Republic of California amended another $800 billion in set-asides last week, ostensibly for the poor (in her district, no doubt), which would seem to eat most of that profit. (One of the ugliest earmarks I've ever seen.)

 

One criticism is that the system is too complex and offers too many opportunities for cheating and profiteering. The Union of Concerned Scientists says that the system is a good foundation but more is required.

 

The Wall Street Journal posted an editorial position on the bill today, which may be found here:

http://online.wsj.com/article/SB121184454327221281.html?mod=djemEditorialPage

 

In a nutshell, the WSJ calls it "the most extensive government reorganization of the American economy since the 1930s." There were some interesting quotes:

 

... the government must create a new commodity – the right to create CO2 – and put a price on it. This is an unprecedented tax that would profoundly touch every corner of American life.

 

Warner-Lieberman has no chance of becoming law this year with President Bush in the White House. But the goal of this Senate exercise is political – to get Members on the record early, preferably before the burdens of cap and trade become more widely understood; to give Democrats a campaign issue; and to pour the legislative foundation that the next Administration could cite as it attempts to regulate carbon limits while waiting for Congress to act.

 

Wow, that's cynical. Makes sense, though.

 

So by all means let's have this debate amid $4 gasoline, and not only on C-Span. If Americans are going to cede this much power to the political class, they at least ought to do it knowing the price they will pay.

 

Right on.

 

I agree with the intent of the bill but it seems to me that something simpler could be used. What do you all think?

[ecoli]

I agree that it's too complex. How can government decide how much a pound of CO2 is worth?

 

Stock markets work because a companies performance indicates its worth. The government can't just create a commodity, especially one that people won't value and won't want to pay for. It's going to be an enforcement nightmare.

[SH3RL0CK]

Would this even pass a judicial challenge?

 

If it did, what are the consequences if the goals are not met?

 

Your dads manufacturing job sent to China where there are no carbon caps? This would be hypocritical as they would probably consume more carbon to make the product AND would also consume carbon to ship the product to you when you buy it.

 

How would the law be enforced to ensure that the goals could be met? Could there be electricity rationing? Rations for items you want to purchase (pretty much everything has to be manufactured)? Police with search warrants in your house taking away the inefficient refrigerator and incandescent light bulbs?

 

If it were enforced, what happens when this really starts to hurt the American voter (Hint, the lawmakers will be climbing all over themselves to repeal the law)?

 

Seems like this is mere political posturing to me, I suspect the bills sponsors know or hope the bill has no chance at all to pass.

[CDarwin]

I agree that it's too complex. How can government decide how much a pound of CO2 is worth?

 

Stock markets work because a companies performance indicates its worth. The government can't just create a commodity, especially one that people won't value and won't want to pay for. It's going to be an enforcement nightmare.

 

Europe's been doing this for years, you know. The US Congress didn't just make the concept up. The market decides the price of a pound of CO2. The biggest problem in Europe is that the credits were sold too cheaply and in too great a quantity and the price collapsed. They've partially fixed that now and CO2 as at about $30 a tonne, I believe.

 

A carbon tax would be better, but cap and trade is hardly unworkable. The US has already used the system successfully to reduce sulfur emissions.

[ecoli]

Europe's been doing this for years, you know. The US Congress didn't just make the concept up. The market decides the price of a pound of CO2. The biggest problem in Europe is that the credits were sold too cheaply and in too great a quantity and the price collapsed. They've partially fixed that now and CO2 as at about $30 a tonne, I believe.

 

I know they use it in Europe, and I'm against that market, on principle.

 

And the problem they had is exactly the problem I described... when the government sets the value of the commodity, the price can't change when it needs to.

 

What if the value of carbon changes rapidly, and the government is too slow to react?

 

A carbon tax would be better, but cap and trade is hardly unworkable. The US has already used the system successfully to reduce sulfur emissions.

I didn't know that... what was the scale of it's use? I have a feeling that a cap and trade of carbon would be on a bigger scale.

Edited May 29, 2008 by ecoli

[Pangloss]

So we seem to have interest on both sides of the issue. I find myself tending towards what CDarwin says above -- we need to be leading by example. China sees itself at a disadvantage in trade -- they're not going to clean up their awful emissions problems if they perceive that it will make it take that much longer to drag their people out of the stone age, while the United States does nothing.

 

But is the system too complicated and unworkable? Does it provide for too much corruption and waste? These are my main concerns.

[ecoli]

So we seem to have interest on both sides of the issue. I find myself tending towards what CDarwin says above -- we need to be leading by example. China sees itself at a disadvantage in trade -- they're not going to clean up their awful emissions problems if they perceive that it will make it take that much longer to drag their people out of the stone age, while the United States does nothing.

On the other hand, does this "cap and trade" tax going to put us at a trade disadvantage? From what I've heard, Europe's steel industry is moving to the middle east, because of cap and trade.

 

American businesses have demonstrated that they have no problems moving offshore. Do we really want to push our companies overseas, and then have to pay for the fuel to ship goods further?

 

I don't think China will see this as a political motivator to take care of their own emissions problems. If anything, they'll see it as a chance to capture even more of the world's production market. And we won't have much political leverage over them, if they're producing all our goods.

[CDarwin]

And the problem they had is exactly the problem I described... when the government sets the value of the commodity, the price can't change when it needs to.

 

What if the value of carbon changes rapidly, and the government is too slow to react?

 

The government in Europe set the price initially (too low) but then the market took over. The government doesn't continue to set the prices once the system is set up. In the US, the price won't be set by the government initially either, but in an auction, an improvement over the European system.

 

I didn't know that... what was the scale of it's use? I have a feeling that a cap and trade of carbon would be on a bigger scale.

 

The sulfur dioxide scheme under the Acid Rain Program affected all power producers, so you're right, the scale was different. I can't really think of any way in which scale would be a big problem other than enforcement, though. Again, look a Europe. They've had problems, but those haven't been scale-related, only the result of poor advance planning (and political pressure from the coal companies that killed the idea of auctioning credits).

 

Here's an article I found on the Acid Rain Program and its relevance to this bill: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/03/MNMMTJUS1.DTL&hw=Cap+trade+Acid+Rain&sn=001&sc=1000

[Pangloss]

On the other hand, does this "cap and trade" tax going to put us at a trade disadvantage? From what I've heard, Europe's steel industry is moving to the middle east, because of cap and trade.

 

This ultimately is a question of ideology rather than reality. There are a lot of things I put ahead of trade advantage. Human safety, for example, or child employment -- two areas in which China has a massive advantage. I completely understand your point and don't question it's relevence at all. But as I say I think it ultimately comes down to what you're willing to accept or not accept.

 

(This, by the way, is where public opinion would actually be helpful, telling us what kind of country we're willing to be. A vigorous debate in the court of public opinion on the matter would be not only healthy but productive. But of course what we're do instead is complain about gas and vote some rascals out of office and call it a day. I doubt most Americans will ever become aware of this bill.)

[ecoli]

This ultimately is a question of ideology rather than reality. There are a lot of things I put ahead of trade advantage. Human safety, for example, or child employment -- two areas in which China has a massive advantage. I completely understand your point and don't question it's relevence at all. But as I say I think it ultimately comes down to what you're willing to accept or not accept.

 

My point is, though, that by giving our companies incentive to leave, then they will. And they'll go to countries that have no child labor laws, less taxes and no emission standards. And there's nothing we can do about it, because we still need the goods they produce.

 

I'm not against environmental protectionism, but I am against putting practices in place that will potentially hurt our economy, and have a questionable affect on the environment anyway (if the companies just choose to leave).

 

(This, by the way, is where public opinion would actually be helpful, telling us what kind of country we're willing to be. A vigorous debate in the court of public opinion on the matter would be not only healthy but productive. But of course what we're do instead is complain about gas and vote some rascals out of office and call it a day. I doubt most Americans will ever become aware of this bill.)

Well, if it gets passed, they may hear about it on the evening news.

[Pangloss]

Having companies "leave" is something of a mixed bag for them as well, and just as we've seen with outsourcing-becoming-insourcing, there are plenty of reasons for them to stay or return, especially if China reads all the comments about pollution at the Olympics and says "Ok, I guess we need a rule like that too."

 

Yeah I think we'll hear about it on the evening news, but that's about it. The law has no chance of being passed though. It will be veto'd, and there's insufficient support for override. I should have mentioned that earlier, sorry.

[Pangloss]

The senate begins debate on this bill this week, which is being covered on C-SPAN (Barbara Boxer is speaking from the floor as I write this). (Correction: That's C-SPAN 2 -- thanks iNow.)

 

The Wall Street Journal had an editorial today that I thought notable:

 

Ms. Boxer expects to scoop up auction revenues of some $3.32 trillion by 2050. Yes, that's trillion. Her friends in Congress are already salivating over this new pot of gold. The way Congress works, the most vicious floor fights won't be over whether this is a useful tax to create, but over who gets what portion of the spoils. In a conference call with reporters last Thursday, Massachusetts Senator John Kerry explained that he was disturbed by the effects of global warming on "crustaceans" and so would be pursuing changes to ensure that New England lobsters benefit from some of the loot.

 

I bet.

 

http://online.wsj.com/article/SB121236237789236363.html?mod=djemEditorialPage

Edited June 2, 2008 by Pangloss

[iNow]

The senate begins debate on this bill this week, which is being covered on C-SPAN (Barbara Boxer is speaking from the floor as I write this).

Correction. C-SPAN 2. Also, thanks for the head's up (regardless the appropriate channel).

[CDarwin]

The responsible thing would be to plow all of that money into researching alternative fuels and mitigation tactics against global warming. In fact, we should really demand that. And by "we" I mean the constituents of legislators who actually stand a shot of voting for this bill (which isn't me).

[Pangloss]

Thanks, I meant to say C-SPAN 2, much obliged. (Where you been iNow? Too quiet around here!)

[iNow]

And the Yay's have it. The motion is agreed to. Now it's time to debate and add amendments starting on Tuesday morning.

 

 

<Pangloss... just didn't have anything to say. >

[Rev Blair]

My point is, though, that by giving our companies incentive to leave, then they will. And they'll go to countries that have no child labor laws, less taxes and no emission standards. And there's nothing we can do about it, because we still need the goods they produce.

 

I'm not against environmental protectionism, but I am against putting practices in place that will potentially hurt our economy, and have a questionable affect on the environment anyway (if the companies just choose to leave).

 

You deal with that through trade deals though. Obama has already taken the position that trade should be tied to the environment, workers' rights, and overall human rights. That's something that progressives everywhere, not just the US, have been pushing for a long time.

 

So you cap your emissions, then deal with "dirty" products being shipped in through tarriffs. Your closer trading partners (Canada and Mexico) will follow suit fairly quickly. Then others will jump on the wagon.

 

You are the biggest market in the world, if you want China to clean up its act, that's the way to do it.

[iNow]

The stagnation in our Congress is downright disgusting sometimes.

 

 

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/06/06/MN2Q114L06.DTL

 

The Senate's bid to pass a far-reaching climate change bill ended in defeat today, with Democrats arguing that GOP leaders had sabotaged their effort to cut U.S. greenhouse gas emissions.

 

The Senate vote fell short of the 60 votes needed to head off any possible filibuster, limit amendments and move the bill forward. Senate Majority Leader Harry Reid, D-Nev., immediately pulled the bill from the floor. The final tally was 48-36.

 

 

Democrats were still fuming that Senate Minority Leader Mitch McConnell, R-Ky., had held up debate for nine hours Wednesday by requiring Senate clerks to read the entire 492-page bill, which was payback for Democrats' slow pace on President Bush's judicial nominees.

 

The federal measure would cap emissions starting in 2012 and reduce them by 66 percent by 2050. It would require about 2,100 major emitters - mostly coal-fired power plants, refineries, natural gas processors and chemical plants - to buy credits to emit greenhouse gases.

 

Republicans complained that the measure would saddle the U.S. economy with higher energy costs, which could hurt businesses and ultimately would be passed on to consumers.

 

 

Don't they realize that it doesn't matter how much money people make or are able to keep if there is no place left on earth to spend it? [/exasperation]

[Pangloss]

The stagnation in our Congress is downright disgusting sometimes.

 

Don't they realize that it doesn't matter how much money people make or are able to keep if there is no place left on earth to spend it? [/exasperation]

 

What they really needed was 67 votes, since they would have had to override a veto. (And then of course a similar majority in the House.)

 

But it was still progress. This is really the first time such a bill has been seriously debated and voted on since the scientific community reached a unilateral consensus on global warming. With both presidential candidates supporting the concept, and Dems likely to increase their majority this fall, it's obviously going to come up in the 111th Congress, and with a quite good chance of passing.

 

Also, another year will give people time to adjust to the new energy reality, get out of their broken mortages (so they can move closer to work), and swap out their SUVs for better gas-mileage cars. That may sound like a big thing to happen in a small amount of time and for little gain (congress doesn't HAVE to listen to its constituents), but when people begin to realize that something like this can actually IMPROVE the energy-economic dynamic then congress will likely feel that vibe and act accordingly.

[swansont]

Also, another year will give people time to adjust to the new energy reality, get out of their broken mortages (so they can move closer to work), and swap out their SUVs for better gas-mileage cars. That may sound like a big thing to happen in a small amount of time and for little gain (congress doesn't HAVE to listen to its constituents), but when people begin to realize that something like this can actually IMPROVE the energy-economic dynamic then congress will likely feel that vibe and act accordingly.

 

I think it's a little too late for some of that. SUVs have seriously reduced trade value these days, and I imagine moving is a little tough with the housing market, unless you're willing to sell below value.

 

What kills me is that we have the capability of cleaning up CO2 and reducing oil demand by going solar and nuclear, and yet congress piddles around with short-term extensions on the tax breaks for solar. Solar electric may be more expensive right now, but at least the money can stay here, rather than going overseas.

[ecoli]

What kills me is that we have the capability of cleaning up CO2 and reducing oil demand by going solar and nuclear, and yet congress piddles around with short-term extensions on the tax breaks for solar. Solar electric may be more expensive right now, but at least the money can stay here, rather than going overseas.

What kills me, is that they subsidize oil and ethanol, but refuse to go drill for our own oil.

 

Stop subsidizing oil or let us get our own oil. That should convince the oil companies to diversify and invest in nuclear and solar (and wind). The market's ripe for a cheap fuel source, and with high gas and oil prices, people will forget about their NIMBY syndrome. Hell, I'll let them build a nuclear plant in my backyard if it means cheap energy. Otherwise, we're just sending mixed signals.

[Sisyphus]

Wait, so you mean "drill for our own oil" metaphorically, as in domestically-based replacements for oil like nuclear, solar, and wind? Or are you talking about Alaska (which would have barely any effect)?

[Mr Skeptic]

If a carbon/carbon dioxide tax/cap is implemented, it would have to apply to products produced overseas as well. Otherwise, we will scare companies offshore, massively increase our imports (using more fuel to transport it as well ), and accomplish nothing positive. It would probably be legal despite trade agreements, as it would apply equally to American goods as to foreign goods.

[foodchain]

While you can say it will force companies offshore how exactly will it do that, say with numbers in a complex economical or social culture? How will the CO2 sell, or really the right to make it? The larger problem I see is that technology that differs from hydrocarbon is a huge potential market. That being said China is no technological slouch for a nation, and I have read about the idea that “green” technology is also researched for and implemented in such a nation. If companies did not want to run the long term gambit of CO2 prices would it no be more beneficial to purchase other technologies when possible? The idea that CO2 buildup is bad for the environment for causing a green house effect is basic science, its also a major reason Venus is so hot as a planet.