Cap™

There have been many public eulogies for cap-and-trade (or cap™, my preferred moniker) lately, not least from optimist sources like the New York Times and people who really ought to know better like Sen. Lindsay Graham.

But here is what Robert Stavins has to say:

Although cap-and-trade has fallen dramatically in political favor in Washington as the US answer to climate change, this approach to reducing carbon dioxide (CO₂) emissions is by no means "dead."

The frequent pronouncements by the punditry and the politicians over the past year that health care reform was "dead" should indicate the potential credibility of similar claims for cap™. Without explicitly advocating for any of the cap™ programs currently on the block, I believe I can firmly agree with Mr. Stavins—cap-and-trade is not dead. It is curious, therefore, that Sen. Graham pronounced it so when his own bill contains a distinct, if marginal, cap™ program.

Indeed, other carbon trading programs are budding and flourishing elsewhere. In California, the emissions reduction law AB 32 contains a cap™ and is set to be phased in over the next several years. Efforts to repeal this landmark legislation are not seeing a great deal of success.

California is also, as of 2007, a member of the 11-member Western Climate Initiative, a regional carbon cap scheme that will regulate 90% of emissions by 2015.

Finally, the northeastern Regional Greenhouse Gas Initiative cover 10 states and proposes using a cap™ program to reduce utility emissions 10% by 2018.

So advocates of cap™ should have plenty to be happy about, in theory. But their battle is not yet won—not by a long shot. Sen. Bernie Sanders today wrote a letter to Senators Kerry, Graham and Lieberman, demanding that their bill not preempt these state and regional efforts to reduce emissions, a fate that could very well result from the passage of the KGL bill. Such a move would replace economy-wide cap™ programs with a scaled-down, sector-specific version. Setting aside the inherent weakness of the landmark regional efforts (carbon offsets, low carbon prices), cap™ advocates had better cross their fingers and hope that the WCI and RGGI are around long enough to do any good whatsoever.

Update: I can certainly imagine Sen. Graham's claim that cap-and-trade is "dead" could be a purely political move (i.e., call the cap™ program in KGL something else and hope no one notices). This could actually be a fairly effective strategy.