Cap and Trade and Die

If the political elite aren't already doing everything wrong when it comes to climate change, then I must be missing something.


Consider the current situation: the Democrats are pushing several bills in the House, all of which would establish some version of a national cap and trade scheme for CO2 emissions. The frontrunner, the American Clean Energy and Security Act - or, because all legislation needs a catchy brand name, “ACES” - would set a limit on the total carbon emitted by energy corporations and major industries. (Think coal and gas power plants, refineries, factories, etc.) Within this cap the government would auction, or possibly give away credits permitting a quantified amount of pollution by industry. Corporations meeting and exceeding mandatory reduction targets could sell their unused credits to those not meeting the targets. To put it simply, this would establish a market for buying and selling a limited number of carbon pollution allowances.

There is nothing remotely simple or straightforward about the Democrat's plan, however. The length of the ACES bill alone is a clue - it's more than 600 pages, first draft. It's all about complexity, obscurity, endless buying, selling, bundling and re-bundling of securitized pollution credits, possibly combined with “offsets” and even “grandfathered” allowances among other jargonistic economic mechanisms. All of this will theoretically reduce carbon emissions to levels capable of sustaining life on earth. However, don't expect many politicians to speak about it in these realistic terms. Congress and the talking heads it has summoned to testify so far have mostly been jabbering about mystifying concepts like “energy security,” and “economic competitiveness” in relation to the bill's merits and shortcomings. If only amphibians and migratory birds could talk, if only coral reefs held “expert” status in the Capitol....

In an unlikely moment of candor the CEO of ExxonMobil, of all people, expressed his disdain for cap and trade earlier this year saying that it, "inevitably introduces unnecessary cost and complexity.” While Rex Tillerson's motives are more than suspect, his appraisal of cap and trade is oddly right on the mark, even an understatement. Not only would a cap and trade regime introduce byzantine rules, regulations, and of course loopholes, it would also financialize the cause and supposed solution to climate change. This is in fact the centerpiece of cap and trade. Although the stated goal of the plan is to cap greenhouse gas emissions, the only assured result would be the creation of a financial playpen for wealthy securities traders who stand to make mouthwatering profits off of the buying and selling of capped quantities of ecocide.

You'd think that after the last year of Wall Street revelations it would be universally recognized that financialization is hardly a means to creating a stable and just economy. Is it really something the Democrats want to propose as the solution to impending planetary disaster?

Eschewing the Democratic version of cap and trade, and absolutely opposed to anything that would have the effect of transitioning society away from hydrocarbon-based energies, the Republicans, the political party of corporate-energy incarnate, are mobilizing behind their own strategies. The main GOP opposition to the Waxman-Markey bill seems to center on its ambitious aims. Republicans say it goes too far, imposing costs on energy corporations and major industries and reducing profits too much. Painting the Democrat's cap and trade plan as a “tax hike,” Republicans, led by Senator McCain, have alluded to a much more corporate-friendly cap and trade scheme that would give out pollution allowances gratis, instead of auctioning them.

Regardless, under any conceivable cap and trade scheme, government revenues are minimal and their redistribution is not clearly tied to a plan for transitioning society off carbon-based energy. Transfers of wealth and power would mostly occur within the tight and high circles of the financial oligarchy, the major energy companies, banks, brokers, and capital investment firms.

One of the more nefarious proposals that is likely to get bi-partisan support in the Congress is nuclear power. The Obama administration has already signaled its support for nuclear energy, especially with the appointment of University of California physicist Steven Chu as Secretary of Energy. Chu has said that fission-based power plants should “absolutely” become a larger part of the energy-producing portfolio. The main nuke lobby, the Nuclear Energy Institute has been hard at work in recent years to position its corporate members as the best solution to global warming. The NEI celebrated earth day this year with a PR campaign offering “emission-free electricity to the goals of blue skies, clear water and a clean planet.” The coming “nuclear renaissance” needs only two things to exploit the current crisis of ecological and political climates - a placid, demobilized American public, and billions in state subsidies to underwrite plant construction and insurance. That and a permanent waste depository for the toxic and radioactive sludge churned out by nuclear power plants.

Countless independent scientists and economists have weighed in negatively on cap and trade proposals and called for a much simpler, more effective alternative: a carbon tax. The most ardent proponent, NASA scientist James Hansen has proposed a substantial tax and 100% dividend. The dividend “can drive innovation and economic growth with a snowballing effect. Carbon emissions will plummet far faster than in top-down or Manhattan projects [i.e. cap and trade schemes or “clean coal” research]. A clean environment that supports all life on the planet can be restored.”

A carbon tax could most easily be applied at the points of origin, where carbon is quite literally being mined and pumped out of the ground and smoke stacked into the biosphere. The government could quite easily tax every coal mine operator, oil and gas corporation, and electrical utility, etc. The tax revenues could then be plowed into the development and creation of truly sustainable, decentralized, democratic energy technologies and infrastructures. As climate and energy researcher Greg Mello has pointed out, the technologies we need to start using mostly already exist. Taxes on carbon emissions could be ramped up over time to eventually transition society away from carbon energy sources. According to Mello, “This would not 'crush the economy,' just change it radically, as it must if we are to have any economy at all." Mello sees the Waxman-Markey legislation as a potential disaster. "It would preempt the field and leave a sub-prime carbon bubble and ecological disaster in its wake.”

And yet cap and trade has all the momentum, in no small part because the American public is disengaged from the debate, and corporate America is so deeply invested in the outcome.

Barring any change of course, the Waxman-Markey bill will likely be combined with competing legislation, modified in no small ways by the Republicans, especially in the Senate, and become law within the year. Cap and trade even has the support of the biggest, most lavishly funded environmental NGOs like the Natural Resources Defense Council and Environmental Defense Fund. NRDC and EDF have even gone so far as to build a coalition of corporate CEOs representing Duke Energy and DuPont among others, escorting them before Congress to speak in favor of cap and trade legislation.

All of this is happening right now, as though completely oblivious to the steady stream of alarming research published everyday in the world's leading scientific journals. To sample but a random few;

• A study published this year in the American Meteorological Society Journal of Climate reports that their survey of the flows of over 900 rivers worldwide for the past fifty years indicates major sources of freshwater are in precipitous decline. The culprit is double: dams and diversions as well as reduced precipitation from climate disruption.

• A recent study led by the US Geological has concluded that the death rates of trees in western North America have doubled over the last three decades, rapidly exceeding the rates of new growth. Our forests are turning into carbon emitters as rising temperatures, dry skies, and associated stresses stand to destroy much of the continent's biodiversity, leaving rotting stumps where once stood thick stand of pine, fir, spruce, and juniper.

• The journal Nature has published multiple studies on the most shocking phenomenon of ocean acidification, demonstrating the link between rising atmospheric carbon levels and a dropping ocean pH. One recent study concludes that, “if these trends continue, key marine organisms—such as corals and some plankton—will have difficulty maintaining their external calcium carbonate skeletons.”

In other words, life is coming undone all around us and because of us, because of our economy, and yet the best the US political leadership can offer is a scheme to commodify and trade the cause of this catastrophe?

Perhaps next they will propose capping the number of species, setting reduction targets, and establishing a market to trade in their extinction?