Good thing Cap and Trade didn’t become law to pollute our air.
(COUNCIL ON FOREIGN RELATIONS) – When the Waxman-Markey cap-and-trade bill collapsed a few year back, advocates of aggressive action on climate change despaired. But a fascinating and provocative new analysis from Dallas Butraw and Matt Woerman at Resources for the Future suggests that people might want to revisit that judgment: by 2020, they write, domestic emissions will “probably [be] less than would have occurred if the Waxman-Markey cap-and-trade proposal had become law”. Whether you believe that depends on some important details.
The underlying logic is relatively simple. Butraw and Woerman identify three main sources of emissions reductions over the next decade: changes in the economy (notably cheap natural gas), state and regional policies, and regulation of carbon dioxide under the Clean Air Act (CAA). They project that those will collectively lead to a 16.3 percent reduction in carbon dioxide emissions below 2005 levels by 2020, with standards under the CAA contributing more than ten percentage points of that. That is close to the target the United States announced at Copenhagen.
Then they make an important observation: Waxman-Markey would have preempted regulation of carbon dioxide under the CAA. The carbon price in the bill would have pushed emissions down, but the lack of new CAA regulations would have pushed it up, with the net impact, in principle, ambiguous. In addition, the impact of state level policies and changes in the economy would have been blunted under Waxman-Markey: by reducing emissions, they would have lowered the price of emissions permits, prompting some offsetting emissions increases elsewhere.
Butraw and Woerman ultimately estimate that emissions would only have declined 13.6 percent by 2020 under Waxman-Markey – more than 2 percentage points less than without it. (This does not include controversial emissions cuts through offsets.) Worse, they observe, Waxman-Markey would have seen participants “bank” emissions permits equivalent to 5.7 percent of annual emissions, in turn allowing them to increase their emissions by that much in later years. If you factor out this sort of emissions-shifting, they observe, Waxman-Markey would only have resulted in a 7.9 percent cut, a full ten percentage points less than without it.
Quote via: Council on Foreign Relations.