Cap-and-Trade -- What's the Point?

"There’s a point at which you’ve got to ask yourself, 'what are we doing here? What’s the point?”"

That’s Elaine Kamarck, a former Clinton administration official and advisor to at that time Vice President Gore and she’s talking about the Waxman-Markey cap and trade bill. In order to garner enough votes to pass the House of Representatives, policymakers made promises that have groups like Greenpeace questioning the environmental effectiveness of the bill.

One of the most contentious provisions in the bill is the use of offsets to reduce carbon dioxide emissions, in which, “a manufacturing plant in, say, Gary, Ind., that is exceeding its “permitted” expulsion of CO2, could continue to commit this sin against humanity by paying for a Brazilian farmer to plant some trees in the rain forest. A more patriotic company might achieve the same result by paying an Iowa former to implement more “Earth-friendly” farming practices. Of course, to guard against some nefarious polluter trying to cheat Uncle Sam and the world by claiming bogus “offsets,” there must be a monitoring mechanism. Enter the “Offsets Integrity Advisory Board” — yet another group of scientific “experts” that would be tasked with compiling a list of qualifying offsets around the globe.”

Cap and trade is a regulatory nightmare that would hand over more power and money to the government with the intention of reducing global temperatures. The problem with that, however, is the Waxman-Markey cap and trade bill will only reduce temperatures by an amount almost too small to measure. The bigger problem is consumers’ pocketbooks will be hit hard by this bill. The Heritage Foundation’s Center for Data Analysis found that by 2035, gasoline prices would increase 58 percent, natural gas prices would increase 55 percent, home heating oil would increase 56 percent, and worst of all, electricity prices would jump 90 percent. After all, the goal of cap and trade is to drive up energy prices so high that people will use less. Yet in Missouri, state legislators are considering a bill that would charge consumers for saving electricity.

The lingering question is: How on earth did this bill pass? Through the back door: “At a time when some still saw Obama as too inexperienced to adapt to Washington’s backroom ways, Waxman found the president perfectly ready to accept the only strategy that offered hope of success: Sitting down with each group affected by the bill and trading concessions for support.”

Yet many of the same companies that hired lobbyists to help shape the 1,200-page bill and will receive handouts in the short-term will inevitably face significant amount of economic pain in subsequent years from drastically higher energy prices. They will have to shed jobs or ship them overseas.

As the climate change debate moves to the Senate, it’s important to remember Elaine Karmarck’s two questions. What are we doing here? What’s the point?