If you're too young to remember acid rain, just know that Republicans once averted a war with Canada over sulfur emissions.

Let's back up for a minute and discuss:

The Political History of Cap and Trade
How an unlikely mix of environmentalists and free-market conservatives hammered out the strategy known as cap-and-trade

* By Richard Conniff
* Smithsonian magazine, August 2009

Donny Shaw at OpenCongress.org asks "Is There a Republican Alternative to Cap and Trade?"

Sure there is, we'll just call it "emissions trading".

Getting all this to work in the real world required a leap of faith. The opportunity came with the 1988 election of George H.W. Bush. EDF president Fred Krupp phoned Bush's new White House counsel—Boyden Gray—and suggested that the best way for Bush to make good on his pledge to become the "environmental president" was to fix the acid rain problem, and the best way to do that was by using the new tool of emissions trading. Gray liked the marketplace approach, and even before the Reagan administration expired, he put EDF staffers to work drafting legislation to make it happen. The immediate aim was to break the impasse over acid rain. But global warming had also registered as front-page news for the first time that sweltering summer of 1988; according to Krupp, EDF and the Bush White House both felt from the start that emissions trading would ultimately be the best way to address this much larger challenge.

EricLykins's picture

Oh, forget it.

To Block EPA Regulations, Koch Industries Expands Lobbying Campaign To Children

This summer’s “Regulation Reality Tour,” produced by Koch’s grassroots marketing arm Americans for Prosperity (AFP), featured a “moon bounce in the shape of a SWAT car for children,” ostensibly symbolizing the boogeyman of Environmental Protection Agency “Carbon Cops.” “Let’s make sure we keep doing our part to ensure that our generation passes on to our children and grandchildren the same freedoms we enjoyed,” AFP cries, in protest of sewage overflow rules.

Nelson Chen's picture

Emissions trading

In terms of pseudo-market mechanisms, what about the simpler possibility of imposing a Pigovian tax on pollution? Figure out a way to emit less pollution, pay less tax. The money collected goes into the general fund.

I don't know what the rate should be on regular coal-fired plants, but I remember how if a carbon-tax were imposed on gasoline, then (per the European carbon price) there'd be a $0.17/gal tax on it.

There can even be tax cuts to make the tax revenue neutral.

EricLykins's picture

I had to look up Pigovian. It

I had to look up Pigovian. It turns out that discussing the history of "internalizing the externalities" wouldn't be complete without Arthur Pigou, who developed the concept of economic externalities. Thanks.

It seems the thing to do is start with the basics of the Pigovian tax and then work on counteracting negative effects (or just give allowances over the initial cap away for free and let them be traded). This May 2010 Summary Report of Carbon Tax Policy Reform in China talks about the three principles of CO2 taxes.

The first argument about putting a price on carbon is that the cost of energy will go up, and this will hurt poor people the most, because it is a regressive tax. Poor people spend a larger percentage on their income on energy than rich people. This was a huge fear with the acid rain issue in the 80s and it makes the Chinese nervous today as they have seen their taxes nearly double over the past 15 years.

One way to mitigate the regressive distributional impacts is to set a tax-free allowance for essential use of energy. For instance, energy could be taxed only above a certain floor, so that each household has a tax free energy allowance. The idea is that some amount of energy is necessary to satisfy basic needs. Above that floor, energy would be progressively taxed to provide the incentive for reducing energy consumption.

Next is

2) Competitiveness Neutrality: A right carbon tax should preserve the competitiveness of an enterprise... One commonly used way is to grant energy-intensive industries a lower tax rate than, e.g. households, or even to exempt these industries from coverage of the taxes.


Revenue Neutrality: A carbon tax should be revenue-neutral. Revenue-neutral means that any
of the tax revenues raised by taxing carbon emissions should be returned to the public. When a
new carbon tax or energy tax is introduced, the government should lower other taxes to keep
total tax revenue constant, or subsidize to particular sectors that suffer most.

rikki's picture

There's no point in trying to

There's no point in trying to tax all carbon emissions. The easiest thing would be to only tax holders of air pollution permits, who already report their emissions.

The point where alternate fuels become cost-competitive is around $10/pound, so we could start the tax at $1/pound and ratchet it up by a dollar each year, just the sort of gradual, predictable schedule businesses need to adapt gracefully.

This is actually a simple problem to solve, policy-wise. The hard part is the pollution of public knowledge and understanding by wealthy, vested interests. It's probably the simplicity of it that forces opponents of a carbon tax to be so radically dishonest.

EricLykins's picture

It's probably the simplicity

It's probably the simplicity of it that forces opponents of a carbon tax to be so radically dishonest.

Yes. "Occasionally words must serve to veil the facts," Machiavelli wrote. This link lays out the basics of our special interests versus their special interest: labor, consumers and innovation vs. rapidly concentrating power at the top of our banana republic. Not directly related to emissions trading, but I like the quote.

Here's the difference: If you're curious about where AFSCME or SEIU or the AFL got the money they're spending on television and field work, you can look up every dollar of union spending here and here. On the public internet. From your living room. At any hour of the day or night. You'll find it's almost entirely small-dollar donations from working families.

Wanna know where Crossroads GPS, the Chamber of Commerce, Norm Coleman's American Action Network, Americans for Prosperity and the rest of the right-wing soft-money 501(c)s are getting their dough? Tough. This is the "half" that Wall Street Journal bloggers are actively obfuscating. It's the half that will never tell us where they get the dough to run tens of thousands of attack ads in a midterm election.

The Center for Public Integrity looks at potential new Republican committee chairmen, and the thought of BP apologist Joe Barton heading the Energy and Commerce Committee makes me throw up in my mouth a little bit.

Eight of the 14 candidates for the committee chairs got the majority of their campaign funds since 2007 from special interest PACs. For instance, Rep. Joe Barton of Texas, a possible candidate for the Energy and Commerce committee, got 70 percent of the $4.8 million he raised since 2007 from PACs.

Likewise, Rep. David Camp of Michigan, the top contender for the Ways and Means Committee that controls taxes and spending, got a whopping 79 percent of the $6.5 million he collected in the last two elections from political action committees.

From The Guardian: John Boehner's links to lobbyists could be the chink in his political armour
Silly Brits don't know the power of American snake oil, do they?

Getting back closer to topic, from the Institute of Southern Studies:
"European polluters financing Senate global warming deniers and climate bill blockers."

What should really, really piss off every reasonable person in the room is this: What do you get when you vote for the bank bailout and against regulation to keep it from happening again? PAID, baby, paid.

The two top recipients of money from companies receiving TARP funds are the top two House Republicans, Minority Leader John A. Boehner (Ohio) with $200,000 and Republican Whip Eric Cantor (Va.) with $187,000. They are followed by the ranking members of two key House committees, Spencer Bachus (Ala.) on Financial Services and Dave Camp (Mich.) on the tax-writing committee.

The geeky professor crowd is ready to take up the pitchforks and march the streets looking for fights:

"We are taking the fight to them because we are … tired of taking the hits. The notion that truth will prevail is not working. The truth has been out there for the past two decades, and nothing has changed."

EricLykins's picture

Update: Joe Barton's work on

Update: Joe Barton's work on the House Energy Committee is providing diminishing returns by design. He spoke at National Journal's Clean Air Act: Looking Back, Moving Forward policy summit.

Scientific "opinion" is paid for by people with an agenda to regulate carbon under 5000ppm. Ok, then.

"The short answer is we're not going to legislate on the Clean Air Act. When I became Chairman of the Energy Committee back in 2003, former Chairman John Dingell came to see me and the first thing he says is 'don't reopen the Clean Air Act.'"

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