The Great Debate

from James Pethokoukis:

3 reasons why cap-and-trade is in trouble

James Pethokoukis

Sep 8, 2009 16:23 EDT

The man who will almost certainly become Japan's next prime minister, Yukio Hatoyama, is promising to cut the nation's greenhouse gas emissions by 25 percent from 1990 levels by 2020.

That is a far more ambitious target that can be found in the legislation currently making its way through Congress. The cap-and-trade bill passed by the House of Representatives would trim U.S. emissions by 17 percent from 2005 levels. That translates to around a 6 percent cut from 1990 levels.

But even that lesser reduction seems unlikely to happen anytime soon. Climate change legislation faces a tough road in the Senate, and it may get pushed back to 2010 or beyond.

Cap and trade is, like healthcare reform, in trouble, and for many of the same reasons:

- There doesn't seem to be an acute crisis. Polls show that the vast majority of Americans are satisfied with their healthcare. Reasons for complacency can also be found in recent developments in climate change. A new NASA study notes global temperature increases have stalled out this decade, likely because of decreasing solar irradiance.

Obviously some dire event, such as a terrible swine flu season or a brutal spike in temperatures, could refocus public attention and concern. But for now there doesn't seem to be an emergency to motivate either voters or lawmakers.

- Most people won't see an immediate benefit. Proposed changes in the U.S. healthcare system wouldn't immediately change the current insurance coverage of most Americans, despite new government spending and higher taxes. Likewise, cutting carbon emissions will likely incur big costs today with any tangible benefits coming later this century. During a recession, neither provides the sort of cost-benefit analysis that strapped Americans are likely to find compelling.