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The U.S.Republican’s Flip/Flop on Cap-and-Trade

Published 06th November 2010 - 6 comments - 537 views -

The Right Flip: I can remember when Republicans liked Cap-and-trade.  For instance, John McCain cosponsored cap-and-trade bills in the Senate in 2003, 2005, and 2007 and, during his 2008 presidential campaign, proposed a pragmatic national energy policy based upon good stewardship, good science, and reasonableness. As he said then,

“A cap-and-trade policy will send a signal that will be heard and welcomed all across the American economy. And the highest rewards will go to those who make the smartest, safest, most responsible choices.”

And he was right. Having to pay the true cost of fossil fuel use is fair and would create incentives for renewable energy and energy efficiency.

Cap-and-trade was once considered to be the market solution to reducing carbon emissions. While popular, a number of key Republicans, such as Sen. Lisa Murkowski (R-Alaska), Sen. Richard Lugar (R-Ind.), Sen. Lindsey Graham (R-S.C.) went on record as endorsing the policy. Even Sen. Scott Brown (R-Mass.), only two years ago, while supporting a version of a cap-and-trade bill in the Massachusetts legislature said:

”Reducing carbon dioxide emission in Massachusetts has long been a priority of mine. Passing this legislation is an important step … towards improving our environment.”

But somewhere amid lobbying, big donations from power companies, and criticisms from so called conservatives who don’t really want to conserve much, the Republicans are now calling it cap-and-tax, essentially making fun of what was once their own idea.

The Sticker Shock Distortion Flop: In an effort to kill the bill, Republicans such as Senator Tom Coburn (R-OK) are now claiming cap-and-trade would cost each U.S. households about $3,100 a year, a cost that has considerable sticker shock. However, that number was fabricated by doing some misleading  additional math on a MIT study. Dr. John Reilly, the economist who authored the study, has criticized Republicans for distorting his work. In his words,

“It’s just wrong, It’s wrong in so many ways it’s hard to begin.” Not only is it wrong, but he said he told the House Republicans it was wrong when they asked him. “That’s just not how economists calculate the cost of a tax proposal”, Reilly said. “The tax might push the price of carbon-based fuels up a bit, but other results of a cap-and-trade program, such as increased conservation and more competition from other fuel sources, would put downward pressure on prices.” Moreover, he said, consumers would get some of the tax back from the government in some form.

What Is the Uninflated Cost? The report by the nonpartisan Congressional Budget Office (CBO), the entity responsible for providing Congress with nonpartisan analyses of economic and budget issues, estimates that the net annual economywide cost of the cap-and-trade program in 2020 would be $22 billion—or an average of about $175 per household. That figure includes the cost of restructuring the production and use of energy but it does not include the economic benefits and other benefits of the reduction in greenhouse gas emissions and the associated slowing of climate change. Households in the lowest income bracket would see an average net benefit of about $40 in 2020 while those in the highest bracket would see a net cost of $245. Overall, net costs would average 0.2 percent of households’ after-tax income.  That doesn’t seem so bad, particularly as the CBO experts also estimate the climate and energy bill now stalled in the Senate would reduce the federal deficit by about $19 billion over the next decade.

The High Cost of Doing Nothing: The cost of doing nothing may be unacceptably high in the long run because of resource scarcity, environmental damage, and the risk of reachng catastrophic tipping points. A recent report by the National Academy of Sciences details the high economic costs of reduced streamflow, rainfall, and crop yields. Estimates by the World’s top economists such as Britain’s Nicholas Stern  or the US’s Paul Krugman  are that right now it would cost about 2% of the worlds GDP to mitigate environmental damage – but if delayed, that amount could rise to 20% or more of the world’s GDP and put us at risk of an environmental catastrophe.

A Better Flip is Needed: What is it worth to have clean air, clean water, a more sustainable economy, and a less risky future? Can we risk doing nothing? We need a better flip by our Republican leaders.

 

Category: Climate Politics, | Tags:



Comments

J.C. Moore on 08th November 2010:

Thanks. I would favor a carbon tax but it looks like we will get cap-and-trade if anything.I would favor a carbon tax with the proceeds to go toward the mounting deficit in the U.S. budget. There is a 71 page MIT analysis of the science and the economics of the U.S. cap-and trade bill available at http://web.mit.edu/globalchange/www/MITJPSPGC_Rpt146.pdf The bill is stalled in the Senate and it is not likely to pass anytime soon.

J.C. Moore on 08th November 2010:

The general idea of cap-and-trade is that a cap is set at a certain level. Those polluters who exceed the cap must buy credits to do so while those who reduce their pollution receive credits which they may sell to the polluters. In a good system, the cap is slowly reduced which will make the credits, and polluting, more and more expensive. This would reduce pollution, penalizes polluters, and rewards those who reduce pollution. This will favor alternate energy sources but will not put polluters out of business while the alternate sources are being developed.

There is a little more on this at http://jcmooreonline.com/2009/08/24/54/  .

J.C. Moore on 09th November 2010:

I hope some Republicans can be trusted since I’m one. I’ve been trying to point out to the Republican leaders that Republicans have a long history of being environmentally responsible but some think climate denial is a way to win elections and get big donations. Apparently they were right - and that is a sad thing. I posted an article about this or you can see: http://jcmooreonline.com/2010/09/01/have-conservatives-and-republicans-abandoned-conservation/

Charles Jungles Nisz Lourenco on 10th November 2010:

My contribution to this debate
http://migre.me/27LrF

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