Cap-and-trade: the most conservative policy on the block

Once upon a time, cap-and-trade was a green's dream, a bright reality of a possible future -- indeed, it was the hope and expectation of many greens that cap-and-trade would eventually garner enough public and political support to become the patriotic and responsible policy they already believed it to be. But those greens probably didn't anticipate Congress drafting (I won't yet say passing) a climate/energy bill without cap-and-trade, or any explicit carbon pricing mechanism at all. Yet that reality very well may materialize over the coming months, with hopes for an economy-wide cap thoroughly dashed and plans for a utility-only program neither sure-footed nor overwhelmingly popular. So who killed cap-and trade? Without intending to come across as either partisan or simplistic, I think it's safe to say Republicans -- with considerable help from Conservadems like Blanche Lincoln and Ben Nelson -- are responsible for the death of cap. That's not really an accusation either; I'm sure Republicans in Congress would take credit for killing the policy in debate, and the more conservative citizens among us would celebrate its demise. Which is a funny thing, since cap-and-trade is the most classically conservative clean energy policy on the block.

Many (probably most) think of cap-and-trade as basically a dirty energy tax, and since only liberals want to raise taxes, it must be a liberal policy. But cap-and-trade doesn't so much create a tax on dirty energy as a price, and those are two very different things. Cap-and-trade is the neoclassical market-based approach to carbon emissions -- an efficient cap would internalize the full cost of generating energy and charge consumers for using it. After a cap is in place, the market would react like it always does to price signals, and American capitalism would be strengthened by a more confident energy market. And that's the policy that Republicans killed.

Now, any carbon pricing scheme is going to make dirty energy more expensive -- that's the idea. So I can understand Republicans' ideological opposition to a program that, you know, costs money. But relative to more popular programs within the conservative ranks of Congress, I think it's a little surprising. Where do Republicans put their support, if not in this market approach? Well, Republicans Senators Murkowski, Sessions, Brownback and Corker supported an RPS, or a requirement that utilities purchase a certain percentage of their power from renewable sources. Lamar Alexander and Mike Crapo are in favor of subsides, appropriations and loan guarantees for nuclear power plants. Alexander also supports electrification of the auto fleet. Other Republican plans include incentives for biofuels and other alternative energy technologies, and funding for clean energy research and development. (See Jesse Jenkins' post for more on this, plus sources.)

So, we've got a government-run RPS, subsidies and directed tax incentives, education and public research funding, long-term clean tech stimulus, and more government mandates for the operation of the utility and transportation sectors. Many of these are strictly command-and-control government programs for the economy, and those that aren't are clearly "pick-the-winner" policies typically rebuffed by Republicans in favor of market competition and ingenuity -- the kind of market behavior that would follow the implementation of a cap-and-trade scheme.

Now, I wouldn't want to accuse the Senators of being disingenuous, nor ridicule their choice of policies -- I'm a fan of each and every one of these programs, and I applaud the Republicans in Congress for drafting and supporting versions of them. But I do think that cap-and-trade, a once-worthy policy in its own right, deserves to be fully understood. It is not sufficient on its own to decarbonize the economy, and it has a strong negative political charge, but while Obama tries to put liberal and conservative minds together to draft replacement legislation after the death of cap-and-trade, it's worth pointing out that conservatives killed what should have been their ideological poster program.