Compromise is possible on 'cap and trade' bill


POSTED: Monday, April 27, 2009

WITH the Obama administration's blessing, congressional advocates of a complicated energy and environmental measure called “;cap and trade”; are moving forward at a fast pace. Republicans have quickly called it “;cap and tax”; and voiced their opposition. A 648-page draft of the proposal needs thorough examination and debate before committing the country to the far-reaching proposal.

Under the proposal, the government would set an overall limit on greenhouse gas emissions throughout the United States to be reached by a certain date. Companies would receive permits—allowances—reflecting their maximum amount of emissions. Those able to reach that level more efficiently could sell or auction their allowances to other companies that otherwise would face greater costs to comply.

The system worked in controlling acid rain pollution. But the more comprehensive use of it would require major changes in the way the country generates electricity, manufactures goods and transports people and products. It is not a carbon tax, which is paid by companies for every ton of pollution they emit. The tax is simpler than the cap-and-trade system but less flexible; a company can link its system to similar systems around the global economy, including Europe, where the system is making headway.

President Barack Obama endorsed the cap-and-trade system during his presidential campaign and the White House Web page calls for implementation of “;an economy-wide cap-and-trade program to reduce gas emissions by 80 percent by 2050.”;

However, Obama's energy secretary, Steven Chu, and Environmental Protection Agency administrator, Lisa P. Jackson, balked last week at endorsing the draft unveiled last month by Democratic Reps. Henry A. Waxman of California and Edward J. Markey of Massachusetts. They cautiously said they had not read the draft and would work closely with Congress to fashion an acceptable bill.

Waxman, chairman of the House Energy and Commerce Committee, began hearings on the issue Wednesday—Earth Day—and announced a goal of moving it through his committee by late May. Subcommittee work is to begin this week.

Republicans on Waxman's committee complain that the bill would drastically raise energy costs and lead to large job losses. However, an EPA study issued last week says the bill would have a negligible effect on the American economy and consumers.

The legislation needs work before being considered for enactment. It does not specify how the auctioning would work or what would be done with the proceeds of any permit auctions. Obama's budget proposal estimates them to be worth at least $65 billion a year.

Republicans should join in the discussion as long as they acknowledge that a reduction in emissions is needed to bring global warming under control.