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Cap and Trade: It Ain’t Over Till . . .

There’s no doubt that the momentum for cap-and-trade legislation in Congress has seriously slowed and could be in trouble. It passed the House with a margin of seven votes and now seems to be stuck in the Senate. The health-care debate has sucked away both time and any remaining reservoir of bipartisanship. Former Republican supporters appear to be bailing. New opponents are entering the fray. Meantime, an August poll taken by Hart Research Associates has shown that the public prefers the concept of a carbon tax over the idea of cap and trade. Is it still possible to go back and make a fundamental change to the regulatory approach?

Cap and Trade Is Encountering Resistance in Congress

The December 5th issue of the Economist contains a special section on climate change. Their article on “Cap and Tirade” summarizes factors slowing current legislation:

  • Americans on the coasts support it, while the heartland does not
  • Powerful industry interests have begun to oppose it
  • Infighting among many industry blocks like energy and electricity
  • Giving away the initial allowances to special interests
  • Use of offsets, which is seen as a boon to Third World companies
  • A deep distrust of Wall Street and the financial markets that would be formed to value and trade allowances

Americans Strongly Support Controlling Emissions

Polls show public support for emission control. One published in October by the Pew Research Center showed 50% of those who had an opinion supported limits, compared with 39% against. The Hart Research Associates poll indicated 74% of voters favor a measure that would focus on reducing carbon emissions and increasing the use of renewable energy.

Carbon Tax Favored over Cap and Trade

While there has been much discussion in Washington and among lobbyists, most Americans know little about either idea and remain open-minded. Only one in ten considered themselves conversant on the subject. Most surprisingly, when presented with a balanced description of both approaches, a majority (by a good margin) supported the tax. That preference held up across a wide swath of the electorate, independent of their political and sociological affiliations. Reasons identified as important in their support are

  • a revenue stream for tax refunds to offset impact of the tax
  • direct and immediate incentive for business and individual consumers
  • transparent and less susceptible to special interests
  • predictability

I’d say people are focused on the correct issues. Is it too late to go back and look at the best regulatory framework? How can this be addressed and achieve a wide public dialog before the small circle in Washington pushes through their own agenda? Could the President be persuaded to appoint a truly independent commission to study the question and make a balanced proposal?

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