Cap and Trade: Getting the Carbon Pollution Cuts We Need Starting Now
Posted December 7, 2009 in Solving Global Warming
As we draw closer to passing a clean energy and climate law that will create millions of jobs and curb global warming, people are debating how to achieve those goals most effectively. NRDC believes the cap and trade approach is the best way to get the job done, and here is why.
Cap and trade isn’t a new idea. We’ve used it before and we know it works. We’ve used it to get lead out of gasoline, to curb pollution that causes acid rain, and to get rid of chemicals that deplete the ozone layer.
We can do the same with carbon. In fact, we already are. Today, 10 Northeastern states, California, and several other states are operating or setting up similar programs. The House of Representatives passed a cap and trade bill last June. And while progress is slower in the Senate, the bill is moving forward.
Here is what the Senate bill will accomplish. It sets real limits on carbon emissions. It lets companies find the best way to stay within those limits. It creates financial incentives to help them do that and establishes a market where those incentives can be freely traded.
That puts market forces to work at the job of curbing climate change. It’s a powerful tool. And it makes good sense.
The bill does something else essential. It uses the vast majority of the money from the carbon market for public good, not private windfall--80 percent over the life of the bill.
It uses some of the money to help promote the use of wind, solar and other energy sources that will never run out. It uses some of the money to help develop energy-efficient cars, homes and workplaces. And it uses some of the money to help low-income people adjust to the clean and sustainable energy future we all seek.
Indeed, the bill is carefully structured to make sure that we, the energy consumers, receive the financial value of pollution permits through energy efficiency programs and lower bills.
Some people worry that pollution trading could be manipulated on Wall Street. The answer, though, isn’t to abandon markets, but to strengthen them with the safeguards and oversight the Senate bill provides. That's how we can harness market forces to reward companies that generate clean energy, create green jobs, and curb emissions at the lowest cost.
Still, we understand there are some who prefer a different approach. Some think we should just put a tax on carbon and leave it at that. We respect that position. We just don’t think it will work as well as cap and trade.
You see, a tax may limit people’s release of carbon, but it may not do it enough to change the course of global warming. A cap--especially a declining cap--gives you firm targets and a system for measuring when you hit them.
Some say a carbon tax would be simpler or purer than cap and trade. The tax idea may be simple in concept, but so is cap and trade. Things get complicated when you try to pass real legislation.
That is what happened in 1993, when President Clinton proposed the BTU tax on fossil fuels, including coal, oil and natural gas. First, industries lobbied successfully for exemptions and special-interest provisions. Then they derided the bill as full of loopholes. (One clever lobby firm sent Congressmen blocks of Swiss cheese.) The proposed tax got smaller and smaller, and less and less effective. Ultimately, the BTU tax failed to pass at all.
Climate change is the single greatest environmental challenge of our time. It threatens us all. So no one should be surprised to hear varied and sometimes competing voices weighing in on how best to confront it. That’s how American democracy works.
What’s important is that our discussions ultimately lead to solutions. We have one before us. The clean energy and climate legislation now before the Senate will put Americans back to work, reduce our reliance on foreign oil and create a healthier future for ourselves and our children.
That’s why we support it. That’s why we are working to get it passed. And we hope others will do the same.
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Comments
bernardo — Dec 7 2009 01:28 PM
Unfortunately, James Hansen disagrees with you regarding cap and trade. And Annie Leonard has an excellent new video summarizing concerns regarding this agenda emissions trading which is loved by Wall Street; her video can be found at http://www.storyofstuff.org/capandtrade/
[editor's note: to avoid copyright infringement we've removed the text of Hansen's NYT op-ed and instead have provided the above link.]
Kat — Dec 8 2009 11:47 AM
bernardo, I'm pretty sure NRDC has seen Annie's video and this article seems to be a response to the questions raised in the video. NRDC has it right, they are more knowledgable than 99% of groups out there and people should trust them when they say that strengthening the cap & trade bill before the senate is the best shot we have to achieve politically what we need to do to keep the planet inhabitable.
it's cap and trade or socialist revolution, which do you think is more likely to succeed. the congress isn't going to pass anything close to what Hansen or Annie want. even carbon tax proponents such as John Larson www.larson.house.gov aknowledge that there are about 1/3 the votes for a carbon tax as there are for cap and trade. cap and trade bills have been before congress over and over again but have never had enough votes to pass. we don't need the environmental community/people who understand the science of climate change to fracture- that'll only make it easier to maintain the status quo. Our time would be better spent, not arguing with each other, but lobbying our senators to strengthen the bill as much as possible. that's what me and my friends did at Senator lieberman's Friday you can check the video here http://www.youtube.com/watch?v=_g8TzKihOvg ( all my content so I have permission to post it)
Kat — Dec 8 2009 12:19 PM
when reading that NY Times article I couldn't help but laugh when I read "[...]when the fee reached $115 per ton of carbon dioxide" because that's so high.
if you really want to get there ($115/ton), I agree it would be a great, clear-cut solution but you're going to need to convince thousands of people to quit their jobs and devote 40 hours a week to lobbying congress/ educating the masses in order to ever make a $3,000/year energy tax pass even if it is fed back to consumers via rebates, it is just way too good a talking point for conservatives to use to destroy any public support for the bill. "they want to tax you $3,000 a year" vs Markey Waxman (house cap and trade bill) which costs less than 50 cents a day.
also I didn't understand why Hansen uses this as a critique of cap and trade-
"If every polluter’s emissions fell below the incrementally lowered cap, then the price of pollution credits would collapse and the economic rationale to keep reducing pollution would disappear." IF IT'S BELOW THE CAP THEN YOUR GOAL WAS ACHIEVED AND YOU DON'T NEED THE MARKET INCENTIVE TO REDUCE POLLUTION FURTHER, IT HAPPENED ON ITS OWN. There is a still a market for RGGI offsets even though emissions are far below the cap. As long as pollution permits from times of economic collapse can't be rolled over and used 5 years later when things are booming I don't see a problem with it. If emissions are below the cap and you have a problem with it then your cap wasn't low enough to start with?. These >500 word op-eds from Hansen and 10 minute videos from Annie aren't helpful to me, it's better to go line by line through the bills that are before congress and critique specific parts of the bill and lobby strongly to strengthen those weak parts of the bill than to pan "Cap and Trade" as a whole or "Carbon Tax" as a whole. Either could work but one is way more far along in the game (Cap & Trade) and I will defend it unless someone can convince me that a carbon tax has a better chance of passing. No votes in the senate means no emissions reductions. We desperately need to pass climate legislation. We need everyone on board.
which carbon tax bill do you suggest we try to pass? how long will it take to pass? how many votes do you have locked down? how likely is it that the tax will be higher than $50/ ton? if you don't have a good answer then please don't oppose the Clean Energy Jobs and American Power Act yet, find specific flaws and call your Senators to ask them to strengthen the bill. google it :)
Stuart Anderson — Dec 14 2009 11:58 AM
I own a small farm in Central New York, in the bullseye of the Marcellus shale natural gas deposit maps. The gas drillers' landmen have been breathing down our necks, but many landowners, for a variety of reasons, do not want to lease their mineral rights. On the other hand, this is a relatively poor neighborhood, and the money offered (a pittance compared to value of the gas) is difficult for many to refuse. I would be interested in leasing my mineral rights to an organization that pledges NOT to drill my gas, continuing the sequestration of carbon that has gone on for millions of years. My anti-drilling neighbors and I would love to be able to do this out of the goodness of our hearts, but our wallets don't allow for such altruism. Would it be possible for long term non-drilling leases to be paid for by selling carbon credits for the gas kept locked away for a decade or two? I've approached a couple of carbon trading organizations with the idea and gotten nowhere. In New York, such a scheme would require overturning the built-in assumption that drillers are working for the public good and can withdraw gas from under your property whether you want them to or not, a sort of eminent domain; this might not be as difficult as it sounds, since there is also a powerful protection afforded mineral rights lease holders which makes no distinctions regarding a leasee's ability or intention to actually extract minerals.
If the nations owning tropical rainforests are going to be enticed into preserving their forests with carbon credit allowances, I don't wee why owners of natural gas deposits should not be afforded a similar opportunity. By decreasing the available supply of gas, the price would be driven up and consumption/emissions would be reduced.
Stuart Anderson
Otego,NY