Call it the flinch heard round the world. Or the feint heard down Pennsylvania Avenue. The Senate charged boldly to a floor vote on a complex climate-change bill, stared defiantly at cost estimates, glanced heedfully at news of economic distress, and on June 6 turned quickly to other business.
Democratic Senate leaders couldn’t muster enough votes to limit debate on the Boxer-Warner-Lieberman Climate Security Act and withdrew it from consideration. They complained about Republican scare tactics. Republicans countered that the majority party wanted not serious consideration of a climate-change bill but rather legislative mud to sling at President George W. Bush.
Is it too much to hope that at least a few senators, whatever their party, studied the bill and concluded that it didn’t merit their support, now or anytime?
Emission limits
The Boxer-Warner-Lieberman bill followed the cap-and-trade route to action on emissions of greenhouse gases. It would have assigned annually declining limits to emissions and authorized the government to sell tradable emission allowances to businesses. It also would have dispensed $3.3 trillion that cosponsor Barbara Boxer (D-Calif.) estimates the government would collect through 2050 from the allowance sales. The payments ostensibly would have eased the imposed adjustments in energy use.
For supporters of the legislation, timing was unfortunate. The price of gasoline in the US was approaching $4/gal when floor discussion began. It’s an election year. Many lawmakers who might otherwise have supported the measure were not, under these circumstances, eager to vote for something sure to raise energy prices even more. Senate leaders thus could pull the bill at the first sign of trouble, call it a Bush failure, and know that more auspicious times await. The likely nominees of both major parties, Sens. John McCain (R-Ariz.) and Barack Obama (D-Ill.), both support cap-and-trade measures in some form. By the time the next president has settled into office, energy prices might have subsided.
Prospects thus look bright for cap-and-trade legislation after November. Or do they? Is it possible that the US now has taken its first hard look at cap-and-trade and decided it didn’t like the view?
The oil and gas industry should hope so. The cap-and-trade strategy for the fight against climate change is expensive and devious. The allowance trading at its core adds market flavoring to a toxic mix of economic manipulations by the state. The costs are indistinct but inescapably large. The approach, mandating emission cuts big enough to approach environmental significance, has to assume the development of nonfossil-energy sources and technologies on implausible scales. And there’s no assurance that the cost, economic rearrangement, governmental expansion, and technological overreach would have any effect on global average temperature.
A cap-and-trade scheme would turn into a contest for political favors. This already is evident in the lavish adjustment payments that the bill just withdrawn promised in an effort by its sponsors to buy support. And trading in allowances whose value depended on governmental decrees would invite mischief. Overall, cap-and-trade would punish energy use and reward exploitation of regulatory systems.
These are fundamental deficiencies. The problem with Boxer-Warner-Lieberman isn’t that it’s too complex or too aggressive. It’s that it pursues an unworkable strategy. No matter who wins the presidency, the bill can’t be fixed.
Industry divided
Climate change, like many issues, has divided the oil and gas industry. Some companies support involuntary precautions. Some companies doubt the need for precaution but want clarity of regulation. And some companies see climate-change response as big cost undertaken for little purpose.
What oil and gas companies should be able to agree on is the importance of honesty in a fateful debate and in whatever policies result from it. Cap-and-trade creates too many dark corners, beginning with the costs it would load onto energy users. The oil industry should avoid it.
The alternative to cap-and-trade is a carbon tax. Both schemes raise the cost of using fossil energy. A carbon tax just doesn’t hide the pain. It’s the only proposition conducive to honest debate over climate change remedies and therefore the only alternative worthy of consideration.
