Cap and Frayed

Here's Kevin Drum on what he concedes is the most ambitious cap and trade legislation Democrats can realistically hope for:

First, their [the Waxman-Markey] cap-and-trade program allows a lot of offsets: two billion tons in all, which allows companies to pollute away as long as they “offset” their carbon emissions somewhere else.  In theory, this is fine, but in practice it's an invitation to abuse, substituting purely fictional reductions for real ones.  Second, it allocates a portion of the emission credits directly to affected industries instead of auctioning 100% of them.  This is yet another invitation to abuse.

It's possible, of course, that both of these things can be beaten into submission with the proper oversight and regulation.  But what are the odds?

[…]

A bill that started out with no offsets and no allocation might eventually end up with offsets and allocation.  But what happens to a bill that caves in on these issues right at the start?  It gets even worse as it wends its way through the sausage factory, that's what.

As Ezra says, Markey and Waxman are as good as they come on this stuff, and if they don't believe that a clean bill stands a chance even as an opening bid, they're probably right.

Drum is right about those “invitations to abuse,” which is to say, mechanisms that practically gurantee abuse. And Drum's right that it's only going to get worse. The “opening bid” comes from some of the most zealous environmental ideologues in Congress. And the sausage factory is about to come online. Yet Drum remains hopeful! We'll see how he and his comrades feel about what I'll bet will be a gutted and impotent scheme good for little but corporatist jockeying for government-enforced advantage over competitors. If it turns out that way, will he want to kill it then? The folks who kept telling us that cap and trade and a straight carbon tax are “equivalent” were always full of it. There's this thing called “politics,” you see, which does not treat them equivalently. 

Here's my column on cap and trade as a spectacular instance of corrupting and unstable political capitalism.