Monday, July 13, 2009

With Cap-and-Trade Proving Unworkable, It's Time for Plan B, Say Carbon Tax Advocates

/PRNewswire/ -- The Waxman-Markey cap-and-trade bill barely passed the House and appears to be faltering in the Senate; it's time for Congress to consider a more straightforward alternative to the unwieldy cap-and-trade approach, a coalition of environmental groups told the Senate Monday. At a Senate briefing today, a panel of scientific, economic and legal experts discussed the drawbacks of cap-and-trade and advocated a direct tax on carbon emissions with revenue returned to the public, preferably through payroll taxes reductions, as the best approach to passing effective climate legislation.

Panelists who spoke at the briefing included *Dr. James Hansen*, leading climate scientist; *Dr. Robert Shapiro*, Co-founder and Chairman of Sonecon and the U.S. Climate Task Force, and former U.S. Undersecretary of Commerce; *Cecil Corbin-Mark*, Deputy Director of WE ACT for Environmental Justice and Co-Coordinator of Environmental Justice Leadership Forum on Climate Change; *Professor Janet Milne* of Vermont Law School, contributing author of "The Reality of Carbon Taxes in the 21st Century." *Brent Blackwelder*, President of Friends of the Earth, moderated. The briefing was hosted by the Carbon Tax Center (, Climate Crisis Coalition (, and Citizens Climate Lobby (

Last Thursday, Senate Environment and Public Works Committee Chairman Barbara Boxer announced that the Senate's climate change bill won't be ready until some time after lawmakers return from August recess, a month later than previously planned. The delay raises doubts about whether the current bill can garner the votes to pass.

The House bill, the American Clean Energy and Security Act, passed by only the slimmest of margins (219-212) after last-minute deal-making further weakened its provisions and ballooned the legislation to over 1,400 pages. The vote on the bill, authored by Rep. Henry Waxman (D-CA) and Ed Markey (D-MA), broke along partisan lines, with only eight Republicans supporting the measure, and several progressive and environmentally-oriented Democrats voting against the weakened measure.

"The political weakness of Waxman-Markey is actually a positive sign for the climate," said Marshal Saunders, president of Citizens Climate Lobby. "Cap-and-trade is a very tough sell in the Senate. If Congress has any hope of passing meaningful climate change legislation, it will have to consider Plan B - a revenue-neutral tax on carbon pollution. Waxman-Markey stalling in the Senate could be a turning point towards something that will actually work."

"The Senate must do better than the House," said Tom Stokes, Coordinator of the Climate Crisis Coalition. "Cap-and-trade tries to hide the carbon price, which gives opponents license to make outrageous claims about its cost. In contrast, the cost of a revenue-neutral carbon tax would be clearly known. With unemployment at 9.5% and consumer spending down, using carbon revenues to boost every worker's take-home pay will help address both the climate and the economic crisis."

"President Obama stresses the need for open, rigorous debate to develop sound policy. Supporters of the Waxman-Markey bill maintain that it is the most important piece of environmental legislation ever, yet they cut off discussion of direct carbon pricing: a simpler, more effective policy supported by most economists and a growing spectrum of concerned citizens. Not a single hearing addressed or explored revenue-neutral carbon pricing as the principle mechanism for containing greenhouse gases," Stokes said.

"The compromised and fundamentally flawed Waxman-Markey cap-and-trade would lock-in an ineffectual approach that would accomplish little, while blocking effective action for years," said Daniel Rosenblum, co-director of the Carbon Tax Center. "The main beneficiaries would be Wall Street and polluters who want to be protected from having to take prompt action. The Senate should start over with a simpler and more understandable carbon pricing system that will do what cap-and-trade won't: encourage energy efficiency, clean renewable energy and prevent catastrophic climate change."

Briefing panelist and leading climate scientist Dr. James Hansen, argued the Waxman-Markey approach would fail to reduce CO2 emissions enough to prevent catastrophic warming. "Continuing to increase burning coal, oil and gas will soon drive atmospheric CO2 well over 400 ppm and ignite a devil's cauldron of melted icecaps, bubbling permafrost, and combustible forests from which there will be no turning back," Hansen said. "The Waxman-Markey bill locks in fossil fuel business-as-usual and garlands it with a Ponzi-like 'cap-and-trade' scheme... It sets meager targets -- 2020 emissions are to be a paltry 13% less than this year's level, far short of the trajectory needed to return atmospheric CO2 to safe levels -- and the bill sabotages even these by permitting unverifiable 'offsets,' by which other nations are paid for projects, most of which would have been undertaken anyway. A far superior alternative to cap-and-trade is a rising carbon fee, which provides the best incentive to move to ever higher energy efficiencies and carbon-free energy sources. As engineering and cultural tipping points are reached, the phase-over to post-fossil energy sources will accelerate."

Briefing panelist Robert Shapiro, former Under Secretary of Commerce, pointed out that the trading component of cap-and-trade -- buying and selling permits to release CO2 -- would also create a trillion-dollar market in carbon futures and derivatives that could crash financial markets again. As he wrote in April, "The unavoidable volatility of the prices of emission permits... would attract furious financial speculation, since speculators live off of volatile prices. And we now know the risks that we all run when rampant speculation occurs in financial instruments tied to our economic foundations, such as housing -- or energy."

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Briefing panelist and Vermont Law School professor Janet Milne cited the carbon tax's recent track record outside the U.S. as evidence of its political strength. In British Columbia, Premier Gordon Campbell and his Liberal Party passed a revenue-neutral carbon tax last summer, and despite an aggressive campaign against it, went on to win reelection in May.

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