Paul Krugman has a NY Times op-ed piece “The Perfect, the
Good, the Planet” in support of the Waxman-Markey Cap-and-Trade bill (here):
If we’re going to get real action on climate change any time soon, it will
be via some version of legislation proposed by Representatives Henry Waxman and
Edward Markey. Their bill would limit greenhouse gases by requiring polluters
to receive or buy emission permits, with the number of available permits — the
“cap” in “cap and trade” — gradually falling over time.
It goes without saying that the usual suspects on the right have denounced
Waxman-Markey: global warming isn’t real, emission limits will destroy the
economy, yada yada. But the bill also faces opposition from some
environmentalists, who are balking at the compromises the sponsors made to gain
political support.
So is Waxman-Markey — whose language was released last week — good enough?
Well, Al Gore has praised the bill, and plans to organize a grass-roots
campaign on its behalf. A number of environmental organizations, ranging from
the League of Conservation Voters to the Environmental Defense Fund, have also
come out in strong support.
But Greenpeace has declared that it “cannot support this bill in its current
state.” And some influential environmental figures — most notably James Hansen,
the NASA scientist who first drew the public’s attention to global warming —
oppose the whole idea of cap and trade, arguing for a carbon tax instead.
I’m with Mr. Gore. The legislation now on the table isn’t the bill we’d
ideally want, but it’s the bill we can get — and it’s vastly better than no
bill at all.
I’m not yet sold. I’d like to think we can do better. I may
be prepared to live with no bill rather than this bill.
First, the give away of the right to emit greenhouse gases to existing polluters kills the bill for me. Krugman puts it this way:
The more serious objection to Waxman-Markey is that it sets up a system
under which many polluters wouldn’t have to pay for the right to emit
greenhouse gases — they’d get their permits free. In particular, in the first
years of the program’s operation more than a third of the allocation of
emission permits would be handed over at no charge to the power industry.
Now, these handouts wouldn’t undermine the policy’s effectiveness. Even when polluters get free permits, they still have an incentive to reduce their emissions, so that they can sell their excess permits to someone else.
I’m for auctioning off all permits to pollute and refunding the revenue to the public through reductions in payroll taxes or some such equitable scheme. Giving free rights to continue polluting to some polluters means they do not have to raise their rates to the public. Which means the market would still not be giving the appropriate price signals. Increasing the costs of dirty energy to the public is, of course, what worries politicians afraid of voter reactions, but it is essential to the transition to alternatives. Why have a bill that doesn't do that?
Second, I recognize that China and India are going to determine the fate of
global warming. A US bill will affect global warming to the extent that it
influences actions taken in those countries. Krugman makes an assertion I’ve
not heard before and think may be wrong:
Not to put too fine a point on it, think about how hard it would be to verify whether China was really implementing a promise to tax carbon emissions, as opposed to letting factory owners with the right connections off the hook. By contrast, it would be fairly easy to determine whether China was holding its total emissions below agreed-upon levels.
This is not obvious to me.
Sorry, Al!
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