Whether a climate change bill emerges from the US Congress this year is much in doubt. Most Republicans still oppose the very idea of reducing emissions of greenhouse gases. Democrats are less than united in their commitment to it, once forced to consider the implications. The signs are that if a bill does somehow pass, it will be ugly.
A subcommittee of the House of Representatives has taken the lead in drafting a cap-and-trade plan -- the approach promised by Barack Obama -- but its initial efforts give one pause. . .
During the campaign for the presidency, Mr Obama promised that all permits would be auctioned. His first budget counts on revenues from that source to finance his "Make Work Pay" tax credits for the low-paid -- to the tune of more than $600bn over 10 years. The House committee’s current proposal chooses to give 85 per cent of the permits away. The hole in Mr Obama’s long-term fiscal arithmetic just got bigger.
That is not all. Predictably, in the disbursement of this enormous windfall gain, the House proposes to reward favourites, such as regulated utilities, and punish villains, notably the oil companies. Some emitters will receive more permits in relation to their needs than others. This would create a perpetual struggle for political advantage. If you wanted to promote corruption, this would be a good way.
Sunday, May 24, 2009
From a May 18th Financial Times editorial: