smokestacks1 Cap and Trade Climate Bill Inadequate, Basically WrongDespite the outrage from the right and extreme right about the climate bill recently passed by the House of Representatives, the legislation is totally off-base and as its stands, it will barely help the environment at all. As a matter of fact conservatives have focused their fury on the handful of Republicans who voted in favor of the sweeping legislation and have been praising the Democrats who have voted against it.

What we basically have is that science – and you cannot really debate science politically – tells us that there is a climate problem and that unless we take immediate and sweeping steps immediately, the consequences for the ecosystem that our children and grandchildren will live in will be serious and severe.

There is a saying that “everyone is entitled to an opinion, but not to his own facts”. Climate change is one of those cases in which we have facts, despite what the naysayers might be saying. It is of course a global problem and the U.S., or Europe alone, without the cooperation of China and India and the rest of the world will not be able to accomplish much.

Frankly, we have to agree – at least in part with some of the conservatives, as the Waxman-Markey cap-and-trade bill is not really the most efficient way of handling the problem. It will once again create a huge trading market for Wall Street; it will become another object of speculation. The permits to emit carbon, the speculation, and the derivatives will not only increase the overall cost of the program, but will also make our energy costs more volatile.

In short: there are better ways of addressing the climate change than a cap-and-trade system. One is the carbon tax in which you would collect the tax from the polluters and recycle the revenues towards more environmentally-friendly energy producing sectors. That would of course make the dirtier sources of energy more expensive, while making solar, wind and other “clean” energy sources relatively cheaper.

This would make businesses and individuals more interested in investing into these clean sources of energy and into a low-carbon economy in general. Wall Street would also have relatively little – if anything – to do with this process and that after all the mess that the Street shysters have caused for everyone seems encouraging in its own right.

A carbon tax would not only be considerably less complicated and not so prone to speculation as the cap-and-trade option, but it would actually encourage people and businesses to purchase and use less polluting vehicles and appliances and provide a real incentive to produce energy – electricity in particular – in a much more environmentally friendly manner.

The Waxman-Markey cap-and-trade bill will not really reduce emissions, or produce any environmental benefits for at least 10 years. It is also the kind of bill that makes the coal producers perfectly comfortable. Many pollution permits were given to utilities that use the coal. What the bill really amounted to was as it is often the case – another noble idea that was incredibly diluted under pressure from lobbyists and special interests to the point of becoming pretty much useless.

The only thing that seems to make Americans change their wasteful habits is cost. When the price of gasoline exceeded $4 per gallon, everyone rushed to buy a fuel-efficient vehicle and the huge SUVs were almost impossible to sell. Most automakers – particularly those who relied on pickups and other large vehicles felt the pinch the most. Now that gasoline costs considerably less than $3 per gallon, people are not so worried anymore and that believe it, or not is not very good news at all. That’s why we need to have an incentive such as a carbon tax. It would make people and companies see that being greener, less wasteful and less polluting basically costs less in the long run, besides protecting the environment.

In a way cap-and-trade would do that also, to a degree, providing we have a real cap, so we are actually reducing emissions. In that manner the price of energy would go up, based on its carbon content. The cap-and-trade option is a supremely complicated way of achieving anything, as you would have to go through many steps to actually achieve any results. And at each of those steps different interests could intervene. The carbon tax solution would be much simpler, most likely cheaper overall, more efficient and less prone to speculation.

The European cap-and-trade system, known as the Emission Trading System (ETS),  is the world’s largest pollution market, and it offers important lessons for the U.S.  The main lesson is that cap-and-trade, by itself, won’t make much of a dent.

Despite what the naysayers, special interests and conservatives in general might say, we can only hope that the U.S. Senate will not go along with the cap-and-trade model and that it will show some leadership, common sense and backbone and will actually approve a carbon tax climate bill – one that is not diluted by special interests and lobbyists, but the kind of legislation that will actually do both the environment and all of us some real good.

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