The Post ran an editorial, “Cap and Return: Fight the recession or fight global warming? Congress can do both,” that is as confused as it is well-meaning.
The Post supports strong action now, but they recycle a new inactivist talking point — we need to modify or weaken our climate strategies because of the recession — they seem astonishingly unfamiliar with the policies that are currently being discussed, and they embrace a climate proposal that simply won’t work. Let’s run through it:
… the looming recession will lessen the political will in Washington to pursue policies that would add costs to doing business or take money out of the thin wallets of consumers.
Sens. Barack Obama (D-Ill.) and John McCain (R-Ariz.) have committed to putting a price on carbon-burning fuels such as oil and coal through a cap-and-trade system of declining emissions allowances that would be auctioned off to polluters. We agree with Mr. Obama’s plan to auction 100 percent of the allowances to reach the goal of an 80 percent reduction in greenhouse gas emissions below 1990 levels by 2050. But how to accomplish this without exacerbating the recession? No problem. Return to the American people every penny of the trillions of dollars expected to be generated by these sales.
Exacerbating the recession? The people who write editorials for major newspapers really ought to know better.
Is it possible that the next president and Congress would agree to and enact a cap-and-trade system that even starts constraining emissions before 2012? No.
Heck, none of the major bills on the table actually lowers emissions from current levels for two decades. Just how long is this recession going to last?
And returning every penny is an equally questionable strategy, but before commenting on it for the umpteenth time, let’s see what else the Post says about it:
This is not a radical notion. In Canada, British Columbia already does what we are proposing. An economy-wide carbon tax was imposed in the province in July. The $1.85 billion in Canadian dollars that it is expected to generate over the next three years will go back to the population in the form of reduced tax rates for all residents, corporations and small businesses. A climate action credit will be distributed to the poor to help with rising energy costs.
While the climate change bill passed by the Senate this year and the “discussion draft” released by Reps. John D. Dingell (D-Mich.) and Rick Boucher (D-Va.) this month provide relief for low-income families, the measures split most of the potential proceeds among various funds intended to spark innovation and spur development of alternative energy that will one day lessen the dependence on fossil fuels. Even in the best of times, we would worry that this gets government into the business of picking winners (and succumbing to legions of special pleaders) when it should get out of the way and let price trigger the technological efficiencies that business will assuredly develop and invest in to meet or exceed the carbon caps. Giving the money directly to the American people has the virtue of being transparent …
At a time of impending fiscal constraints, the temptation to pull back from pressing environmental goals is high. But taking on climate change and facing down the recession is not an either-or proposition. With global warming happening more quickly than scientists predicted, Earth can’t wait.
I (and others) have repeatedly explained why a carbon price by itself (which is what the Post seems to be arguing for) has no plausible chance of achieving the reductions that we need, let alone doing so in the timeframe needed.
The carbon price does not get you efficiency fast enough — that requires smarter regulations — and it simply offers no plausible path to getting the deep reductions needed in the transportation sector. Remember, even a politically unimaginable price of $1,000 a metric ton of carbon only raises gasoline prices $2.50 a gallon, which wouldn’t even take us to European prices for gasoline, and their average fuel economy is only slightly better than what our 2007 energy bill already requires.
The only hope of making the deep and rapid cuts needed to preserve the health and well-being of future generations is if the government combines a serious carbon price with an across-the-board effort to push very hard on the best low-carbon technologies using every conceivable tool of government, including R&D, incentives, tax credits, codes and standards, and regulations. A carbon price isn’t even the most urgent climate policy.
The highlighted lines in the Post editorial reveal a well-meaning but ultimately self-destructive perspective — the notion that the government action described in my previous paragraph is “picking winners.” The Post itself ends with an urgent plea: “With global warming happening more quickly than scientists predicted, Earth can’t wait.” Well, the Earth can’t wait for a price signal to ramp up, and we certainly can’t bet the future on the planet on the hope that business actually makes all the right decisions in the right time.
Note to the Post: Businesses make as many bad decisions as government. Indeed, if the past few months have demonstrated anything beyond a shadow of a doubt, it is that a price signal alone (i.e. the ability to make money doing something) is far from a guarantee that American or global businesses will act responsibly and make wise choices. This canard of “picking winners and losers” is one I’m sure we will hear over and over again, so I’ll do a specific post on it later.
Finally, I do think we will probably end up recycling most of the revenue, not necessarily because it is a great policy idea, but because U.S. politics will make it inevitable. That said, I certainly don’t see why we would recycle all of the revenue. Certainly, it makes no sense to be giving money back to the Bill Gates and Warren Buffets of the world. Exactly how much we should give back and how much would be left over for other purposes, such as jumpstarting the clean-tech transition, will also be the subject of a later post.