Efficiency First

In Praise of Cap and Trade

Why markets, not government regulation, will change America’s energy future

July 8 – Criticism of the American Clean Energy and Security Act has come from all sides – environmentalists who say the bill doesn’t go far enough in capping carbon emissions, climate change deniers who don’t believe the science behind global warming, and fiscal conservatives who believe that we simply can’t afford to invest in cleaner energy during a major economic downturn.

One thing just about everyone can agree on is that the Waxman-Markey bill approved by the House is far from perfect. But a recent opinion piece by Michael J. Gerson, a senior research fellow at the Virginia-based Institute for Global Engagement, makes a powerful case for passing the legislation despite its many imperfections.

Writing for the Washington Post, Gerson described the bill as “a riot of loopholes, concessions and offsets – legislative sausage-making with an excess of offal.” Even so, he argues, the “realistic possibility of disaster” resulting from global warming merits a serious response, and in Gergen’s view, cap and trade is the best tool we have to begin the process of converting America to clean energy.

Critics argue that carbon restrictions, even if fully implemented, would reduce global temperatures only by minor amounts, which is true. We are not going to regulate our way out of global climate disruption. The only eventual solution is technological – the ability to produce affordable, clean power on a large scale.

But conservatives seem strangely intent on ignoring the power of markets to encourage such innovation. Right now, the emission of carbon is essentially cost-free. Putting a price on carbon would make the development of cleaner energy technologies more profitable. New technologies could be employed, not only by America, but also by China, India and the rest of the developing, polluting world. And it is an added (but not minor) benefit that American resources would no longer be transferred to Saudi princes, Russian autocrats and Venezuelan dictators.

It is perfectly legitimate to argue that the House cap-and-trade system is flawed beyond redemption – so complex and confusing that it only benefits regulators and the lobbyists who outwit them – and that Congress should start over with a carbon tax.

It is also legitimate to contend that, while the cap-and-trade system is flawed, it is better than inaction and necessary to spur innovation. And for eight House Republicans who took this stand at great political risk, it is not only legitimate – it is admirable.

Read the full editorial here: http://www.washingtonpost.com/wp-dyn/content/article/2009/06/30/AR2009063002896_pf.html