Friday, June 06, 2008

Environmentalist who Oppose Cap and Trade

I followed closely the arguments about the Lieberman-Warner Cap and Trade bill which was defeated in the U.S. Senate today. One of the things that surprised me was the lukewarm support from environmentalist and liberal activist for this legislation. I would have assumed they would have made a big push to get this bill passed and would have rallied the troops. Instead, what I found was, at best, a half-hearted support. I did not see much passion.

While most of the environmental and liberal organizations did half-heatedly endorse the Lieberman-Warner Cap and Trade bill, not all did so. Among environmentalist there are some who oppose nuclear energy more than they oppose CO2 emissions and do not want any bill passed that would make nuclear energy more attractive as would be the case with a Cap and Trade bill.

Some environmentalists opposed Lieberman-Warner cap and trade because they think the greenhouse emissions cap is not sufficiently stringent. Some liberals opposed the bill because they perceive that the burden of curtailing global warming would fall heaviest on the poor, and their concern for “economic justice” out weighs their concern for the environment. Other environmental groups had the same criticism as did some conservatives and opposed the bill simply because it was a bad bill.

Among the environmental groups opposing the bill were Friends of the Earth,, CREDO Mobile, Greenpeace, and Public Citizen.

Creedo Mobile is an organization that funds liberal causes by providing cell phone and other services and giving a share of their profits to liberal causes. Since 1985 they have distributed over $60 million dollars to various organizations. Consider the following from Creedo Mobile on why they are opposing Lieberman Warner:

In the end, the goal of a cap and trade system is similar to that of a carbon tax - raise the cost of activities that generate CO2 relative to other activities so that producers and consumers choose to generate less. Many who advocate for a cap and trade system do so over a tax on two grounds - a majority of CO2 emissions come from a relatively small number of producers or companies, and in the American political climate, the notion of imposing taxes is thought to be toxic. But rest assured, a successful cap and trade system only works if it has the economic impact of imposing a tax on CO2.

One of the reasons that many companies like the cap and trade system is that setting it up is a fundamentally political act, subject to all the good and bad that is decision making in Washington, D.C. Coalitions are formed, front groups created, lobbyists hired, Senate campaigns funded. All to ensure that someone else has to pay the tax, or, in the case of cap and trade, to argue over the cap (the lower the cap, the lower the implicit tax, and vice versa). Also to fight over whether or not the initial allocation of CO2 permits are distributed based on current pollution or auctioned off, and if auctioned off, who gets the revenue (the equivalent of who gets to spend the tax revenue). (link)

Creedo is exactly right. A cap and trade is essentially a tax and the Congress picks the winners and losers who pay it. In addition, it creates a massive bureaucracy and may be devastating to the economy. Despite grave misgivings about the efficacy of cap and trade, I was willing to swallow hard and accept it, if the cap and trade could be modified along the lines proposed
by Senator Bob Corker.

I am pleased to see that the environmental community did not all fall in lock-step in support of this flawed proposal. With even liberals agreeing that a carbon tax is superior to a cap and trade, I am thinking that a gas tax may actually be a possibility. Perhaps it is time to hold firm for a gas tax and pull the plug on cap and trade.

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1 comment:

  1. Great post. I have linked to it from my blog. I also think that environmental groups may be a little cautious now since energy prices have skyrocketed (many blame them)and also of the ethanol debacle. The American public may turn against them if they don't tread lightly.