Cap and trade is still the right call
Forget trivial tax politics. When it comes to limiting pollution, cap and trade – not a carbon tax – has a record of success.
The great debate over how – and how much – to reduce the greenhouse gasses we emit while consuming energy is heating up. And in what passes for sport in Washington, wise policy is getting whomped by trivial tax politics.
The Obama administration and House Democrats just lofted energy and climate legislation to create a "cap and trade" system for carbon dioxide. But then, stunningly, they ran the right play in the wrong direction – contending that cap and trade is somehow more politically plausible because it won't look as bad as a direct tax on emissions.
Republicans, sensing a fumble, have piled on. Ignoring the fact that cap and trade, which relies on market incentives, is essentially a conservative idea, GOP leaders have assailed it as a costly national energy tax. Other critics see a boondoggle for bureaucrats that will burden American industries. The administration is already giving ground to utilities, suggesting it might auction only a portion of pollution permits.
The stakes – to our national security, to our economy, and yes, to our environment – are too high for this sound policy to be undermined by a sidelines skirmish. Cap and trade is the only play that can work.
Cap and trade is a market, not a tax. It sets a hard limit on total emissions. Then a regulated exchange of tradable permits gives enterprise a choice: Invest in efficiency and better technology – or buy credits from more efficient players, underwriting their cleaner practices. Simple.
But advocating cap and trade largely because "it won't look like a tax" is a head fake that plays right into the hands of opponents.