Picking Winners
June 26, 2009, 12:21 pm
The whole point of cap-and-trade (or a carbon tax) is to set broad costs of emissions or broad tradeable limits, and then let millions of individual consumers and industries figure out the most effective way for each of them to meet these costs or limits. For example, if I were to have a personal cap, changes in my car’s MPG would be meaningless, because my work is 1.9 miles from my house. I would probably start with putting the film coating on my windows of my house I have been considering. They guy in New Jersey who drives 45 miles to work and has a small house might have a different solution.
But this whole philosophy of letting individuals drive the bus flies in the face of everything Congress believes in. They believe they are smarter than you or I, and thus they should pick the solutions, not us. And allowing for individual action doesn’t generate campaign contributions like picking winners does.
So despite being a cap-and-trade bill, Waxman-Markey essentially picks winners. One way is through targeted investments of taxpayer money in technologies whose owners have lobbied hard before Congress. Another is this:
The legislation will drive up individual and commercial consumer’s fuel prices because it inequitably distributes free emissions “allowances” to various sectors. Electricity suppliers are responsible for about 40% of the emissions covered by the bill and receive approximately 44% of the allowances – specifically to protect power consumers from price increases. However the bill holds refiners responsible for their own emissions plus the emissions from the use of petroleum products. In total refiners are responsible for 44% of all covered emissions, yet the legislation grants them only 2% of the free allowances.
This means that Congress has decided to extract all of the CO2 reduction from transportation and other refined fuel users, rather than from electrical power generation. Is this because they have some study in hand that shows the best bang for the buck in reducing CO2 comes from transportation? Of course not, and even if they did, it would be hard to believe given the number of large coal plants in this country that generate far more CO2 than even a fleet of Escalades.
No, the reason for this is purely political — every representative has an electric utility in their district lobbying and paying campaign contributions, but few have organized lobbies of automobile drivers. And so, rather than pushing for fuel shifts from coal to gas or nuclear in power generation, this bill will primarily achieve its meager results from making it more expensive for people to drive.
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4 Comments
1. James H:
Another reason I can think of is keeping the cost impact more hidden. If your electric bill goes up, you can immediately link that to cap and trade (in fact, the power companies will probably mention it in their newsletter, something like “pricing increases due to CO2 regulations”). But with the burden on refined fuels, a couple of different things happen. Gas prices jump, which is blamed on “big oil” and their “excessive profits”, and the cost of all goods and most services also increase. Most people won’t be able to connect the rising costs of G&S to the cap and trade regulation, so no detrimental impact to the pols.
June 26, 2009, 12:37 pm
2. Bob Smith:
Not only are there few auto driver lobbies (other than AAA, whose views on this bill I do not know), there are many anti-auto lobbyists, not the least of which are the many public transportation agencies.
June 26, 2009, 1:40 pm
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