The Inevitable Failure (by Design) of Cap and Trade

When Scott Brown (R-MA) won his Senate seat, swept into office by his promise of becoming the Senate's "filibuster breaker," a lot of people said: "Whew! Now I don't have to worry about that atrocious health-tax bill, or that cap and trade monstrosity!"

That just shows how euphoria clouds the mind. Because as soon as Republicans began celebrating, Democrats started furtively passing sealed manila folders to one another while making shushing sounds.

Republican elation didn't last long. There was a distinct feeling of shock when President Obama let slip that health care was "still on the table." And not just on the table, but that it would wend its way through the Senate via reconciliation, doubtlessly gathering an encrustation of rancid pork as it rolled along.

Well chum, sit down. Because the same thing is happening with the greenhouse gas limiting bill: the cap and trade ... and tax, and might as well spend. It, too, has risen from the dead.

Only it never was dead, of course. It was just in hiding, waiting, and now is under active revision with the leadership of John Kerry (D-MA), Lindsey Graham (R-S.C.), and Joe Lieberman (I-CT).

At this writing, the public doesn't know exactly what measures will be adopted in the revised Senate bill, but we can make some intelligent guesses. The first being that the law of unintended consequences is set to strike once more.

Suppose, as is not likely, that it is true that humans are untowardly affecting the climate such that temperatures are everywhere increasing, and that those increasing temperatures are everywhere devastating or harmful and nowhere helpful. Suppose, too, that these temperature increases are directly caused by controllable greenhouse gas emissions, and that if these emissions can be reduced by a few percentage points, temperatures will not everywhere increase nor be everywhere harmful.

Suppose all that is true. Cap and trade is still a bad idea.

We know that greenhouse gas emissions (GGEs) can be reduced in two ways: by requiring utilities to cap production or engage in sequestration; or by requiring from others limitations on demand.

To limit demand, Congress could mandate citizens drive no faster than 55 miles per hour. That happened before in response to another energy "crisis," so it is rational to believe it could happen again. Congress might also dabble with forcing rental car companies to use only "energy efficient" (i.e., more expensive) cars.

Perhaps Congress could require transportation companies to prove that some function of "miles traveled," adjusted by fuel type, vehicle weight, and so forth, holds steady or falls. Or manufacturers will be taxed for exceeding energy-use "goals" (which will be set as a function of the influence of each firm's senators).