The Inevitable Failure (by Design) of Cap and Trade

Limiting demand will increase costs, which would have to be spread across the economy. Plus, these are costs with no return on investment -- except, possibly, a slightly cooler Earth. Also, any limit strategy will barely put a dent in GGEs, so that even the temperature-ROI is trivial.

Limiting production is straightforward: simply cap allowable GGEs. A mixed strategy of sequestration and sliding caps is also plausible. Utilities will likely be allowed to exceed caps by paying an "offset" tax.

If that is true, then the amount of GGEs will not fall, but will continue their steady increase. The law will then have abandoned its original intent. If it is false -- if there are just simple caps and no tax -- then the entire American economy will be hamstrung.

This is because there is no way enough nuclear, wind, or solar plants can come on line in any reasonable amount of time to make up for the losses in GGE-based energy. Thus, with just a cap and no tax, Congress will have mandated, "Produce this much, and no more."

Now, since even Senator Kerry can understand that much economics, it is very likely we'll see a tax-based bill.

There are hints that a portion of that energy tax will be shunted to the Highway Trust Fund, the agency responsible for the upkeep of interstate freeways. Look forward to fresh paint on the dividing lines and other forms of pork if this bill passes.

Some of the money will have to be put towards non-GGE energy production, both in research and in capital projects.

Who's going to do the research? Energy companies do it now, of course, and they'll likely do so in the future.

This means the government will tax energy companies, spend money on a bureaucracy charged with oversight of the tax, siphon some of that money off for "special projects," and then give a fraction of the money back to companies to research and build non-GGE-based energy platforms. Efficient, no?

In other words, energy companies will be forced to raise rates to pay for the tax -- with all the negative consequences that entails -- or they will be forced to spend less money on research. Either way, GGEs will not fall. And because research will have been hampered, the introduction of new technology will be delayed.

Thus, in the name of good intentions, cap and trade will cause the harm which it seeks to eliminate.

And you can bet your mother's cookies that there will be no provision in the bill for it to dissolve if it is discovered that all those suppositions above are proved to be false.