McCain's Emissions-Reduction Plan Receives Favorable Review

As U.S. Senators Barack Obama and John McCain begin their long descent into tit-for-tat rhetorical games, it's easy to forget key issues the two still broadly agree on: federally funded stem-cell research; nuclear nonproliferation; comprehensive immigration reform; faith-based social services; and global warming.

Obama and McCain agree that human-induced global warming exists and even on the system America should adopt to counteract it -- cap and trade, a plan that sets a limit (cap) on the amount of greenhouse gases emitted by manufacturers and power plants, for example, and then hands out credits that polluters can trade among themselves to pull themselves within the legal limits. Heavy emitters of greenhouse gases have to buy credits from low-level emitters. Cap-and-trade plans reward all sides for reducing emissions. Low-level emitters reduce in order to pile up additional credits to sell and high-level emitters reduce in order to spend less on credits.

Where Obama and McCain disagree on the plan concerns the role of the government, specifically how the government should allocate permits to companies. And unlike the current, silly spat over tire pressure gauges, this one matters.

Obama favors a full auction of the credits, which would act like a tax on companies, collecting a great deal of money right off the bat for the government to redistribute. This cash, he says, could go to alternative energy research and projects, then the credits would go to markets.

McCain says he would dole out permits in much the same way proposed by the Climate Security Act of 2007. That act failed in June to receive enough Senate support to even bring to a vote, but the basics are the same: Give the great majority of the permits away, and let the market set the price to support investment.

Here is where conventional political lines become blurred.

If you favor a more free market approach, McCain's plan may be for you because the government would collect far less money from businesses for redistribution. But if you're spooked by special interests, political favors for lobbyists and political corruption--as McCain says he is--then perhaps you side with Obama's strategy.

So what does Richard Sandor, architect of the wildly successful cap and trade system for reducing sulfur dioxide(SO2) and now CEO of the Chicago Climate Exchange (CCX), say?

He's for a partial auction of credits like the one McCain is backing.

"If you look at full auctioning of permits, what happens?" Sandor asked reporters during a recent interview at his office near the Board of Trade in downtown Chicago. "The day that they are auctioned, you have a net transfer of wealth from the private sector to the public sector at that moment. What, then, happens to climate change? Nothing has happened. You have just had a transfer of wealth."

Richard Sandor is founder and CEO of the Chicago
Climate Exchange, the first voluntary but legally
binding market for trading emissions in North America.

It's better to let the private sector decide where the money should go, Sandor says, which is why he's against a carbon tax. And, he adds, there is precedent for believing so.

"The program that's worked is SO2," Sandor said. "Some amount of auctioning is, I think, OK. We will implement whatever the government does. We don't have an official opinion, but I'm guided by the SO2 program and how it accomplished its objectives so cheaply that that's the way to do it."

Sandor insisted the CCX is not a policy-making entity and that it will implement any system lawmakers put forth. Much like pilots, he said, the CCX will fly whichever planes the engineers--or rather, politicians--design.

"If you design it wrong," he said, "you may have to go 30 extra miles, you may have some accidents, or crashes, and we really speak to the efficacy of the design and leave public policy to the people who are policy makers in Washington. We're not advocates."

The CCX is currently North America's only voluntary but legally binding platform for trading carbon and other emissions. Even without a mandatory cap and trade system in the U.S., many companies have already begun to reduce their emissions in the hopes of improving their public image and perhaps reaping revenues through emissions reductions.

While Sandor explains why he's against Obama's plan for the full auction of credits, his greatest priority is getting mandatory cap and trade in place, whatever the framework. Undoubtedly, this would be a great boon to the CCX, and Sandor believes it is coming.

"Both candidates, McCain and Obama, have publicly embraced it," Sandor said. "I believe in their hearts that they're committed to reducing global warming and see it as a major threat. Is it inevitable? I think so. Could there be bumps? Yes."

Those bumps, worries Sandor, include a terrorist attack that could dislodge global warming from the political agenda in favor of dealing with more immediate problems.

"And that's the nightmare scenario that I worry about because it's easy to not worry about intergenerational problems when you have immediate security needs," he says. "And I'm not suggesting that they aren't more important. In fact, they are. But the thing that will slip will be the longer-based horizon, and I think that's a danger that we have."

Comments

[cam]

Bush promised carbon caps before he was "elected" in 2000 and promptly reneged on his promise. McCain will talk the talk but he won't walk the walk - unless the situation has becomes so dire that even corporate America is becoming alarmed.

[dadw5boys]

So the Giant Corporations agree with Mc Cain !

How cute!

[dadw5boys]

THE CORPORATED SUPPORTED TOTALLY VOLUNTARY PROGRAM IS BEST ???

Totally Voluntary Program!
Is that like saying Please, Please, Pretty Please stop spewing deadly chemicals into our air and water????

[pnd]

Great! Now lets talk about FlexFuel Vehicles!! And get the candidates to take a stand on the legislation just introduced in both the House and Senate week before last.
-Paige Donner

[PuppaX]

Please...at this point I'm too cynical to believe that this guy made his endorsement based on which program will make more money for his exchange.

And by the way, McCain's position on stem-cell research (from his website):

Addressing the Moral Concerns of Advanced Technology

Stem cell research offers tremendous hope for those suffering from a variety of deadly diseases - hope for both cures and life-extending treatments. However, the compassion to relieve suffering and to cure deadly disease cannot erode moral and ethical principles.

For this reason, John McCain opposes the intentional creation of human embryos for research purposes. To that end, Senator McCain voted to ban the practice of "fetal farming," making it a federal crime for researchers to use cells or fetal tissue from an embryo created for research purposes. Furthermore, he voted to ban attempts to use or obtain human cells gestated in animals. Finally, John McCain strongly opposes human cloning and voted to ban the practice, and any related experimentation, under federal law.

As president, John McCain will strongly support funding for promising research programs, including amniotic fluid and adult stem cell research and other types of scientific study that do not involve the use of human embryos.

Where federal funds are used for stem cell research, Senator McCain believes clear lines should be drawn that reflect a refusal to sacrifice moral values and ethical principles for the sake of scientific progress, and that any such research should be subject to strict federal guidelines.

[mediamarv]

A lot if his position statement is just boiler plate, fodder for the conservative flock. If research developed a treatment for his medical conditions (note the plural) you can bet that he would allow anything that would keep him alive.
He's shown himself to be two-faced time and time again. Now, conservative seem to like that in a candidate but with today's media scrutiny, eventually he would be outed!!!

[PioneerKing]

FRANK:

Your argument is as flawed as the entire concept of cap and trade.
Cap and trade is nothing more than smoke and mirrors.
As far as comparing what happened with the Montreal Protocol SO2 to what is should be done with CO2 is a false paradigm.
Moreover, if you had done you research you would know that carbon trading is and has always been a republican party solution that Sandor a long time republican would of course support; and would support the pro-industry polluting stance.

Please, Frank look at what cap and trade does and most of all the unenforceability of cap and trade.

The people who will suffer the most form cap and trade will be those in the least developed nations where their emission rights have been traded away for rights of more developed nations to continue to develop unhindered and to pollute with impunity.

Cap and trade is nothing but smoke and mirrors, actually it is nothing more than the old "dilution is the solution to the problem." from the 40's, 50's and 60's. We know how that all played out in the 70's, 80's and 90's - not very well at all hence a lot of the environmental problems that environmentalist are trying to address in 2008.

http://www.huffingtonpost.com/joseph-romm/mccain-would-raise-electr_b_117767.html

http://www.huffingtonpost.com/2008/08/06/keeping-up-with-the-energ_n_117307.html

http://climatedebatedaily.com/

[NoReally1]

PioneerKing

Montreal Protocol was for CFCs and other ozone-depleting substances. It was a global agreement. Nothing to do with SO2. That was a US program under the Clean Air Act. Most people think it was pretty successful.

[rumsblogger]

You can auction 100% of permits and return the revenues to consumers as a per capita dividend. This would help consumers with the higher prices, and put businesses on a level playing field. More info on this is at www.capanddividend.org or www.carbonshare.org.

If you give away permits as Sandor says, you have to either pick winners and losers (that's not free market), or you have to reward the largest emitters based on their historic emissions (that puts more efficient companies at a disadvantage and provides the opposite incentives from what you want).
Europe has learned from their trading system that auctioning is better than giving away emission rights.

The Regional Greenhouse Gas Initiative in the northeast US will be auctioning close to 100% of permits, and the Western Climate Initiative in western states is considering it. There are billions of dollars at stake. Should they go to the biggest polluters? At a time when gasoline is over $4/gallon, and consumers are already struggling, that would make additional climate policies very unpopular. I think we need to allocate emission rights directly to people, who can sell the permits to companies, and use the money to help pay for higher prices. This is based on the premise of: Who owns the Sky? We all do, equally.