Climate bill is too complex
The convoluted cap-and-trade proposal looks bound to fail. A carbon tax could do the job without so many moving parts.
By Marshall Saunders
The more I look at Congress' legislation to address climate change with a cap-and-trade program, the more it looks like a Rube Goldberg device - one of those amusing contraptions that employ all manner of moving parts in a complicated, convoluted process that performs a simple task.
The task we're talking about - reducing carbon emissions by making fossil fuels more expensive - is pretty straightforward. And yet to accomplish it, Congress has come up with a 1,400-page bill that makes War and Peace read like a short story.
To raise the cost of carbon-based energy and make clean energy technologies, such as wind and solar, more competitive, cap-and-trade creates a market in which thousands of companies are required to purchase permits to emit carbon dioxide. But wait - most of the permits will initially be given away rather than auctioned off. And there's also this messy contrivance called carbon offsets, which allows polluters to invest in projects that reduce carbon emissions. Good luck verifying the efficacy of those offsets.
Which brings us to even more moving parts, including a huge, mind-boggling bureaucracy that would be established to inspect industries and verify compliance. There's also a need to regulate the trillion-dollar market in carbon futures; Wall Street is already salivating over the speculative opportunities in subprime carbon.
And while the legislation includes a mechanism to help consumers afford higher energy costs, the choice of middleman for providing that assistance - utility companies - leaves me a bit skeptical.
I'm not a Nobel Prize-winning economist, but it seems to me we should look to someone other than Mr. Goldberg for inspiration in solving this problem. The trouble with such a complicated device is that, if any of the parts malfunction, the task is not completed. We need fewer moving parts.
And that's the beauty of the carbon tax and dividend, which would impose a steadily increasing fee on carbon at the source, whether it be a well, mine, or port of entry. Most of the revenue from the tax would be returned to consumers through payroll or income-tax reductions - a carbon rebate, if you will.
In addition to being more efficient, the carbon tax and dividend are also more effective. An analysis by the Carbon Tax Center predicts that by 2020, the tax would reduce carbon dioxide emissions to 28 percent below 2005 levels. Even if it delivers as promised, the cap-and-trade bill would effect a reduction of only 17 percent by 2020.
One might be tempted to shrug off this difference, given that the cap-and-trade bill requires an 83 percent reduction by 2050. But the problem is that climate change is happening twice as quickly as previously believed, according to an exhaustive study released last spring by the Massachusetts Institute of Technology. Making matters worse are the "amplifying feedbacks" that climate scientist James Hansen has warned of. For example, as rising temperatures melt the tundra in the arctic regions, methane, a powerful greenhouse gas, is released into the air, trapping even more heat.
Urgency dictates a more aggressive course of action, because it may well be that we get only one crack at heading off significant climate change. Military and intelligence analysts know what awaits us if we fail to reverse this dangerous process: Rising sea levels, floods, severe storms, drought, and famine will create humanitarian crises on an unprecedented scale, and the United States will have to respond to these catastrophes.
"The demands of these potential humanitarian responses may significantly tax U.S. military transportation and support force structures, resulting in a strained readiness posture and decreased strategic depth for combat operations," says a report from the National Intelligence Council.
But despite such warnings from the scientific and security communities, the political will to address climate change appears to be flagging in the Senate. Four Democratic senators have asked that cap-and-trade legislation be delayed until next year. Without their votes, a bill is unlikely to reach the floor.
Perhaps the best way to get climate-change legislation back on track is to take a fresh approach - one with fewer moving parts. The carbon tax and dividend may not be as fun to watch as a Rube Goldberg machine, but I would gladly sacrifice the entertainment for something that works better.