Copenhagen a eulogy for US cap-and-trade

December 22, 2009

I have been saying for some time that I do not think Congress is going to pass cap-and-trade in 2010, or probably ever. (I think the threat of EPA action is empty given the flurry of litigation that would surely follow.) My Reuters news pals seem to agree somewhat and paint an alternate scenario:

1) But the Copenhagen Accord did not include emissions targets. This will make it difficult for lawmakers to argue that the United States should have a cap while China, the world’s top emitter of greenhouse gases, and other big polluters are not legally required to act on climate. “We were previously of the view that cap and trade was becoming an increasingly hard sell in the U.S.,” said Paul McConnell, an energy markets analyst at Wood Mackenzie. “But I think the events in Copenhagen have probably made that even more difficult.”

2) Alternatives to cap and trade will emerge, such as mandates and incentives for increasing levels of energy from low-carbon sources like solar, wind and nuclear.

3) The healthcare debate has delayed U.S. Senate action on climate, and financial industry reform legislation will likely push back the cap-and-trade debate into early next year, analysts said. The longer the delay, the harder it will be to convince undecided Democratic senators to vote for a cap-and-trade plan. “For a lot of moderate Democrats who are up for reelection, they don’t want to be seen as closely attached to this because of the concerns about job losses and higher energy prices,” said Divya Reddy, an analyst at the Eurasia Group in Washington.

4) Kerry said in Copenhagen last week that the Senate bill may not contain cap and trade, and other options are being discussed. So-called “Plan B” alternatives to cap and trade could include carbon taxes and national mandates for power generators to produce higher levelof cleaner energy sources, Reddy said. A new climate strategy could also include elements of a “cap and dividend” plan recently introduced by two senators. That aims to cut Wall Street’s role in emissions markets by auctioning permits to polluters and delivering most of the proceeds to the general public. But Kevin Book, an analyst at Clearview Energy Partners, LLC, said many senators and many companies, like oil major ConocoPhillips and power generator Duke Energy Corp, are already sold on cap and trade. Some power companies that have invested in low-carbon electricity generation feel they could compete better against companies that burn mostly coal under a cap-and-trade regime.

3 comments

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What do your colleagues think about this scenario? The EPA has just removed the ticking time-bomb from capitol hill. The Endangerment Finding trigger may have been pulled to give Obama some weight in Copenhagen–a truly futile exercise–but it will only serve to shelter anyone up for reelection next year. 2010 will be the year that Congress forgot about global warming.

Meanwhile, it’s going to be a bumper year for trial lawyers on all sides of the debate as they take on the EPA’s too lax/too stringent exercise of its newly-minted authority.

Posted by John DeFayette | Report as abusive

It is obvious nothing is going to pass congress and it has been obvious for quite some time. As the climate models become more and more laughingly inaccurate (As temperature are going DOWN when the models forecast they go up) it becomes harder to pass legistlation to “fix” a non-problem. Aside from that Climategate killed Global Warming stone cold dead.

Posted by John | Report as abusive

No carbon bill of any kind will be passed by congress and EPA will not attempt to enforce carbon limits. That would be political suicide for Obama. He’s stupid, but he’s not that stupid.

Posted by Bill Boudreaux | Report as abusive