Corker: Cap-and-Trade Substitute Amendment is Far From Ready For Prime Time

Press Release from Tennessee Senator Bob Corker , May 22, 2008 , WASHINGTON, D.C.

U.S. Senator Bob Corker (R-TN), a member of the Senate Energy and Natural Resources Committee, said today that the latest version of the Lieberman-Warner cap-and-trade bill (Climate Security Act, S.2191) introduced this week is not ready for prime time.

“If a cap-and-trade bill becomes law, every single American will pay more for gasoline, more for electricity, more for food, more for everything they buy as a result,” said Corker. “We believe that any money generated from a cap-and-trade system should be returned to the American citizens burdened with these additional costs, and while we appreciate the step the bill sponsors have taken in this latest version–the bill is far from ready for prime time.

“This is a massive spending bill that uses non-discretionary spending—funded in essence by a tax on the American people—to spend trillions of dollars on new and existing government programs. Rather than using the revenue generated from this cap-and-trade system to fund new and existing government programs, would it not make more sense to return the revenue generated directly to the citizens who will be bearing the brunt of the costs associated with implementing this program?

Under the bill, credits would be freely allocated to entities, such as states, that don’t have to reduce emissions but are able to sell those credits and use that money to assist consumers through rebates or public programs.

“I believe we need to increase the amount of allowances that are auctioned, rather than giving them away for free to other entities who are supposed to use the value of those allowances to benefit the public. In my view, American citizens would be better served receiving relief directly rather than relying on middlemen to provide that relief through government programs.

“I also believe we should eliminate all international offsets as a way for emitters to comply with the U.S. carbon cap. There are serious questions about the integrity of many of these projects, and it is difficult to determine whether these projects would have occurred anyway. In addition, these offsets would have a distorting affect on the U.S. cap-and-trade market and would lead to even more American dollars being spent overseas in countries like China, instead of in America.

“If cap-and-trade legislation is done properly, we see an opportunity to marry the tremendous passion for the environment with the need to have energy security in our country, and we look forward to the debate on the floor and continuing to work constructively with the bill sponsors.”

Noting that climate change and cap-and-trade would be significant issues facing Congress, Corker has spent his first 16 months in office delving into the complexity of the policy. Last May 2007, he traveled to Europe with Energy Committee Chairman Jeff Bingaman (D-NM) to meet with European Union officials, carbon traders, representatives from the utility industry, and cement manufacturers. In July, Corker went to Greenland with Environment and Public Works (EPW) Committee Chairman Barbara Boxer (D-CA) to view the effects of climate change. He has also spent countless hours with Tennessee-based industry, conservation groups, and experts discussing the impacts of climate change legislation.

In April, Corker began making presentations to his colleagues outlining his concerns with the bill.

Commentary

Bob Corker is quickly emerging as one of the best informed U.S. Senators on the complex issue of energy policy and global warming. I am proud of the work he is doing in this regard. I wish however that Corker, or someone, would introduce a revenue-neutral Carbon Tax instead of relying on Cap and Trade. A Carbon Tax is much less subject to manipulation, and is more immediate and direct. While many pundits and economist have expressed support for a Carbon Tax as the best way to combat global warming, no elected official has stepped forward to propose it.

Cap and Trade is the next-best approach for addressing the issue of carbon emission and is much preferred to the approach of subsidizing favored technologies and attempts to regulate emission by mandating reductions. Both a Carbon Tax and a Cap and Trade rely on market forces to achieve results. Since a Cap and Trade Bill is what is before us and a Carbon Tax is not, I am reluctantly supporting Cap and Trade.

Cap and Trade can be very complex. If it is done wrong, it can put distortions in the economy and be ineffective. If done wrong, then it will take a while to discover it is not achieving the desired results and increased greenhouse emissions will, in the meantime, continue. Congress will probably be very reluctant to revisit a Cap and Trade bill once one is adopted so it is very important that they get it right the first time.

A workable, effective Cap and Trade policy is going to have two groups of enemies: Those who don't want to do anything, and those who are so passionate about the issue they will support anything, even if it is a poorly designed program. Those of us who believe the issue of combating global warming is important, must hope that Congress gets it right and passes a good Cap and Trade bill. Making sure Congress passes a good Cap and Trade bill must be the the goal; not just passing a Cap and Trade Bill.

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