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Bill Chameides

Bill Chameides

Posted: June 8, 2009 01:08 PM

Cap and Trade Part 1: It's About the Cap, Stupid


The first in a series of posts on cap and trade.

Where the climate is concerned, don't be fooled: it's ultimately about the "cap" not the "and trade" part.

The debate about climate policy is heating up. The House is getting ready to consider the Waxman-Markey bill. And many say the rubber hits the road on international negotiations on the climate this winter in Copenhagen.

In This Series
Part 1: It's About the Cap, Stupid
Part 2: Walking the International Tightrope
Part 3: You Ask, "What?" I Say, "How Wide?"

It's not surprising that much of the debate has focused on cap and trade; after all, that's what Waxman-Markey would put in place. Now, serious debate is great, but don't confuse it with obfuscation. I have the sneaking suspicion that some people enter the fray about cap and trade to block any sort of climate legislation rather than to make better climate legislation. They are the obfuscators in debaters' clothing.

The Wolves Who Cry 'Cap and Tax'

Some obfuscators wag their finger at cap-and-trade legislation, scolding it as "cap-and-tax" legislation. (For an example, see this Wall Street Journal editorial published just before the Senate voted on the Warner-Lieberman climate bill last spring.) According to this mantra, cap and trade is no more than a not very subtle power grab by bureaucrats -- a backdoor ploy for expensive, big-government social programs foisted on the backs of the unsuspecting consumer. (Ironically, some of the same people who have cried "cap and tax" have also sided for a carbon tax. See here and here. What's that about?)

The Wolves Who Cast Aspersions at Evil Business

And then there are those who cry "cap and profits." To listen to them, cap and trade is a poorly disguised ploy by big business to reel in $ billions. You know, like it is somehow surprising and wrong that businesses would look for opportunities to make a profit from cap and trade let alone any new government policy.

The Wolves Who Are the Defenders of Business

On the other side of the spectrum, you hear the cry that cap and trade is really "cap and destroy American business." This scenario sees cap and trade as an anti-American plot to destroy the American economy and shift huge sums of money overseas -- like huge sums have not already found their way into foreign banks, in large part because of the absence of any coherent national energy policy.

The Real Deal

Here's the thing. Ultimately cap and trade is not about taxes, or profits, or undermining profitability, To be effective, any climate legislation first and foremost must be about capping emissions. The data gathered from surface monitoring stations, ships probing the oceans depths, and satellites circling the globe are sobering. To a very high degree of certainty we know that:

  • the globe is warming,
  • glaciers are melting,
  • forests are dying, and
  • the ocean is acidifying.

Less certain but no less worrisome, storms may be becoming more severe and droughts appear to be lasting longer and occurring more frequently.

With a high degree of certainty these trends can be largely attributed to our own emissions of greenhouse gases. And while predicting the future must always be taken with quite a few grains of salt, our best model simulations say that things will get seriously worse unless we ... well, ratchet down our greenhouse gas emissions. And the best way to do that is by limiting them with a hard cap.

Experts: Global Warming Is Happening and It's High Time for Action

You don't have to take my word for it. Many countries, including our own, use an independent body of experts to resolve complex issues. In the United States, the body is the National Academy of Sciences.

  • In June 2008, the science academies of the G8 + 5 nations stated: "To stabilize the climate,
    emissions should eventually be limited to ... less than half of current emissions. Immediate large-scale mitigation action is required." (Source [pdf])
  • In June 2009, the science academies of 70 countries, including the U.S. National Academy of Sciences, called for "deep and rapid reductions of global CO2 emissions by at least 50 percent [below 1990 levels] by 2050, and much more thereafter" to avoid the dangers of ocean acidification. (Source [pdf])

The only prudent thing to do is to set in motion the policies and institutions that will halt the seemingly inexorable rise in greenhouse gas emissions and then bring those emissions significantly down -- by as much as 80 percent by the end of the century.

And so, the most important test of any climate legislation is: will it lead to significant greenhouse gas emission reductions? Everything else, in the humble opinion of this scientist, is secondary.

The How Debate

There are a variety of approaches to rein in greenhouse gas emissions:

  • technological mandates and government regulations (like EPA using the Clean Air Act),
  • government subsidies (like tax credits for renewables), and
  • market-based approaches, such as carbon taxes and cap and trade.

On balance I favor cap and trade because it is the only approach that actually mandates emission reductions over time. For me, the operative part of "cap and trade" is, as I indicated above, cap.

Debate About the Devil, Leave the Wolves Home

Now it's true that in the case of cap and trade, and perhaps even more so in the case of cap and trade, the devil is in the details. And those details are encompassed in the "and trade" part of cap and trade. Debate on how to do the "and trade" part is appropriate and necessary.

In upcoming posts in this series on cap and trade, I will focus on some of those "and trade" issues, in part to address some of the concerns raised by the wolves. To be sure, the "and trade" issues are complex, difficult nuts to crack. But don't let the wolves get you to throw the "cap" out with the "and trade" bathwater.

Tomorrow I'll take a look at the wolves' cry of "cap and destroy American business" and examine what can be done to protect American businesses if countries like China don't take their own emissions cap.

Cap and Trade Part 2: Walking the International Tightrope

Dr. Bill Chameides is the dean of Duke's Nicholas School of the Environment and a member of the National Academy of Sciences. He blogs regularly at theGreenGrok.com.