Does Cap & Trade Work?

My esteemed Keloland colleague, Cory Heidelberger has a series of posts on the American Clean Energy and Security Act (H.R. 2454—ACESA), commonly referred to as the Cap & Trade bill. This topic is probably moot because the Administration has admitted that the bill will not pass this year. The Administration is saying it's because there is too much else on Congress's plate, which is true and a lot of people were warning about that all along. But the real reason the legislation is in trouble is because it's bitterly unpopular. It strikes me as very unlikely that it will pass next year, with an election approaching. And after that, well, it seems likely that there will be a lot more Republicans in both houses of Congress. I have been saying all along that this legislation would never make it to the President's desk, and I see no reason to retract that claim.

But we might as well look at the merits. As evidence that Cap & Trade works, Cory cites the Clean Air Act of 1990. But that isn't very helpful because there the cap and trade device addressed much smaller and more manageable environmental and technological problems than global carbon emissions. The problem was this: existing legislation required new power plants to meet stringent pollution standards in order to reduce acid rain, etc. Older power plants could not meet those standards, but they could be made at least a little bit cleaner. But under the existing legal regime, as soon as they tried to retool they were classified as new and then came under the new standards. Thus legislation aimed at cleaner energy was inhibiting changes in older plants that would have resulted in cleaner energy. Cap and Trade provisions in the Clean Air Act allowed older plants to buy allowances from newer, cleaner plants (thus the trade). My impression is the same as Cory's: that the legislation worked pretty well.

But it worked because there were affordable alternatives to the older, dirtier technologies. This is not the case when it comes to carbon emissions. At present, there are no cost effective alternatives to carbon emitting technologies like coal except for nuclear power, and it can't make up more than a part of the supply.

If you want to know whether it works, the test would be to look at nations that have tried to use it to curb carbon emissions. I posted on the reasons for this last June. What you will find is that it failed miserably in the European countries where it was tried.

So the available evidence is that cap and trade doesn't work for carbon emissions, and that the legislation can't pass anyway.

Comments

[Stan Gibilisco]

My predictions: Republicans will gain a majority in the U.S. House after the 2010 elections. Democrats will keep their majority in the Senate, but they will not have filibuster-proof dominance.

[William]

It's still a long way out, but I second Stan on the trend for 2010.

Cap and Trade in Europe has been a dismal failure and I agree with KB's assessment that it will never pass in the US.