The current issue of Foreign Policy provides a brief history of Cap and Trade in Capping It Off (Elizabeth Dickenson, March/April 2010). Looking at the concept from its inception in 1967 through to Copenhagen, the article provides a good sense of the evolution of a promising policy.
With U.S. Senators Kerry and Graham working to develop a federal climate change bill, the timing for this article would seem to be good. However, the vocabulary for the climate policy debate has shifted in the last few months.
A little over a week ago the NYTimes reported cap and trade's demise, in "Cap and Trade" Looses Its Standing as the Energy Policy of Choice (John Broder, March 25th) and this past week CBS quoted Interior Secretary Ken Salazar to say that "cap and trade is not in the lexicon anymore" (White House: "Cap and Trade is Out, Stephanie Condon, March 31st).
The turnabout on a policy approach that has dominated climate change discussions for more than a decade comes despite the success of the Acid Rain program, which used cap and trade to reduce U.S. utility emissions of SO2 and NOx by more than 40% since its beginning in 1995. The term has apparently become too polarized and "discredited" to provide a workable basis for a going forward U.S. climate policy.
Some of the blame for cap and trade's fall from grace has to rest with with the congressmen Waxman and Markey who led the bill Congress passed last year and which was based on cap an trade. The NYTimes suggests that the two dished out so many concessions and exemptions to affected industries that they created a long, complex bill favoring those with the most political muscle - the bill came in at 1,400 pages. (Some of the blame also has to rest with those who see the alternative as doing nothing - which makes it easy to highlight costs but hardly realistic.)
However, announcing the death of cap and trade may may be a bit premature. The apparent alternative seems to be simply cap and trade by another name, with the principal difference whether permits are given away to emitters or auction and the proceeds recycled through tax cuts. CBS concludes that ....
"If cap and trade is to survive, it would likely, at the least, need a new name. One solution for the White House could be a piece of legislation from Democratic Sen. Maria Cantwell (Wash.) and Republican Sen. Susan Collins (Maine) called "cap and dividend", which would auction off pollution permits and return three-fourths of the revenue to citizens."
Notably, Ms.'s Cantwell and Collin's bill is only 39 pages.
(A version of this post appeared earlier in the blog at my company website, Eosconsulting.ca).