Cap-and-Trade Fraught with Uncertainty

Here’s an excerpt from a Washington Post story today entitled “Climate bill faces hurdles in Senate”.

The climate-change bill that has been moving slowly through the Senate will face a stark political reality when it emerges for committee debate on Tuesday: With Democrats deeply divided on the issue, unless some Republican lawmakers risk the backlash for signing on to the legislation, there is almost no hope for passage.

The story drew a heated response from NREI Editor-in-Chief Matt Valley. I share his remarks here:

From my point of view, I think the majority of Americans who follow this issue are highly skeptical about a governmental plan that calls for the issuance of permits for greenhouse gas emissions, and they should be. The rules of cap-and-trade as currently proposed seem somewhat arbitrary and capricious from a business person’s point of view. The timing for this controversial idea is particularly bad given the weak state of the economy.

Just as important, supporters of cap-and-trade admit that it’s going to initially raise utility bills in an effort to curb Americans’ consumption of energy. The average Joe is in no mood to be part of a grand experiment that leaves him paying more for utilities, not now. It’s basically political suicide for many legislators who are not on the far left to get behind this measure, particularly in energy-producing states.

I personally do not buy into the idea that it’s inevitable cap and trade will pass now or at some point in the near future. Rather, I believe it’s much more likely that legislators will be forced to go back to the drawing board, draft something much less onerous that business and industry can live with, and which won’t be called “cap and trade.”

Those are my two cents.