Environmental Policy 101: Cap and Trade

By Christopher Forestieri

With global climate change sure to be a key issue in the 2008 election, the U.S. Senate has started debating legislation that would set a cap on the permissible level of greenhouse gasses companies can emit each year.

Ideally, congress would create a ceiling on total emissions and let the free market dictate the proportions by allowing companies that use less energy to trade their excess to companies that exceed the limit.

As time passes, the permissible level of total emissions would be decreased and the revenue generated by the sale of emissions allowances would be put into alternative fuels. Hopefully, the need for carbon-based fuels would also be reduced.

Proponents suggest that this system is more flexible than a ridged, across-the-board limit on emissions. But critics are quick to point out several factors that must be considered. First, cap and trade is based on the assumption that the development of alternative fuels will keep up with the timetable set for lowering the emissions ceiling.

As the acceptable level of emissions is reduced (which is necessary to reach the far lower levels needed to make an impact), the cost of fuels will increase greatly. If a viable alternative to fossil fuels were to emerge, this cost would be offset.

However, there is a fear that advancements in alternative fuels will not be sufficient enough to meet the energy demands of a nation which uses fossil fuels to generate more than 80 percent of its power supply.

Failure to keep up with this demand will result in a serious cost increase for many Americans. This is not likely to sit well with a populace currently mired in a recession-laden economy and faced with already high energy costs seen almost unanimously as excessive. Nor will it serve to move Americans toward the newly recharged environmental movement.

Another potential factor that could alienate the general public and undermine the positives of cap and trade is the benefit the legislation would have for lobbyists.

With proceeds from the sale of energy allowances proposed to fund alternative fuels, special interest lobbyists will no doubt show up to claim their piece of the pie, skewing the public’s perception of cap and trade.

While the goals of cap and trade are certainly formidable, its potential to impact the economy negatively raises doubts in my mind as to whether now is the right time for this type of legislation. Though it would be a tremendously positive step towards tackling global climate change, I feel it could ultimately damage the public’s perception of the environmental movement and risk the support needed for future legislation.

Popularity of this legislation among the general public is essential for the environmental movement to realize its aspirations. But Americans will need to see a payoff after sustainable initiatives are passed.

For good or ill we are a culture of instant gratification, a grim assessment no doubt, but one that must be recognized and dealt with. Peoples’ lives may not have to drastically improve for environmentalism to work, but they certainly cannot worsen.

Increased tax burdens and rising costs will be a major roadblock and will certainly prove disastrous, as will the impression that these burdens benefit pork barrel spending and special interest lobbyists.

With the great opportunity that environmentalism’s renewed popularity in Washington presents, it would be a shame to wreck it with what many see as typical Washington politics.

Hopefully, as the general election campaign begins to gain momentum, each candidate will more clearly define their environmental stance and offer solutions to a flawed proposal with worthwhile goals.