Cap and Trade: A Layman's Perspective

[Armando Delgado]

The United States Senate recently introduced the Clean Energy Jobs and American Power Act, or Senate bill S-1733. This proposed law is the result of a few scientific observations and much speculation: what is better known as the theory of global warming. This theory purports that human-produced CO₂ is responsible for increases in global temperatures, and further speculates that the changes in climate resulting from these temperature elevations will be harmful to humanity. Thus, governments around the world decided that CO₂ levels must decrease. The Senate bill is the American contribution to this global effort.

Of course, decreasing CO₂ levels means decreasing energy consumption, which today depends primarily on fossil fuels in developed countries. Reducing energy consumption will inevitably cause a decrease in industrial productivity, which translates into economic changes. In fact, the purpose of this law is to theoretically bring about the energy changes while minimizing the economic impact to our nation.

Unfortunately, because CO₂ produced by any country goes into the global atmosphere, the energy changes must be carried out by all nations. And there is the rub. The industrial apparatus and economic infrastructure of each country is different, so that the variables introduced into the economic formulas are not only complex but also flexible, adding a built-in unpredictability to the results. The proposed global economic solution, better known as cap and trade, is an effort to bring about an equitable resolution to this particular problem by allowing countries to trade "carbon credits" that are allotted by referencing emission levels to a base-line point in time. In the US law, the base-line date is 2005.

A cursory look at S-1733 will show that this legislation will impact every aspect of American life. Not unlike the health care law, this bill will change how we manufacture, how we travel, and how we live in our own homes. The administrative agency for this law will be the E.P.A., which will set the standards to be followed by the nation. These standards, to be determined in the future, will change with time, becoming stricter. The law mandates a decrease of CO₂ emission levels of 50%, as compared to 2005, by the year 2050.

President Obama and the supporters of this bill say that the United States must do its part in protecting the future of the world. Obama tells us that we are leaders and so must lead, to show the world that if we can do it so can they. Very altruistic, indeed. What is interesting, however, is that a closer look at the scientific projections of the impact on global CO₂ levels by these proposed global reductions will be minimal. So, the obvious question is, why ask the American people for all these sacrifices, when there is no tangible benefit? Yet the answer is simple. Under cap and trade agreements, governments will be the ones assessing the surplus or deficit of emissions, and governments will do the trading of the "carbon credits", so govenrments are the ones to profit from these deals, and the Senate law does not address how those profits will be used. Thus, instead of levying a direct tax on the American people, the administration intends, with this law, to make profits through our sacrifice.

Presently, the Senate is engaged in debating a financial reform law aimed at preventing speculation by banks and Wall Street corporations that could harm our economy. Ironically, the proposed cap and trade law is a quantity economic instrument that fixes the amount of emissions while allowing the price to fluctuate according to the laws of supply and demand. This scheme creates the potential for a volatile market and for corruption, since governments will be able to pick "winners and losers" amongst the involved emissions producers. Thus, the administration and Congress want to "fix" free markets while at the same time engaging in a global market speculation of a grander scale themselves.

"Oh, what a tangled web we weave,

When first we practice to deceive!"

[James Reed]

People seem to think that as conservatives we are against protecting the environment. Conservatives are hunters, fishermen, outdoors people who love the environment and do more to protect it, and understand conservation more than some Hollywierd vegan activist could ever hope to. Buying a Prius does not make you an environmentalist.

Although I believe we need to do all we can to live a clean lifestyle and take care of the earth by exploiting solar, wind, hydro power and increasing our technology to make all electric, hybrid, hydrogen cars and trucks, along with more fuel efficient cars. We also need to build nuclear powerplants, and drill for oil and natural gas here in our country where we can do it cleanly and safely and not support the terrorist countries that we are currently buying oil from.