James Pethokoukis

I don’t think cap-and-trade is going anywhere soon, but its opponents are not letting up on the pressure (via The Hill):

Advocates for manufacturers and small businesses are launching a multimillion-dollar ad campaign against climate change legislation in states represented by senators likely to determine the bill’s fate.

The National Association of Manufacturers (NAM) and the National Federation of Independent Business (NFIB), groups that have historically leaned Republican, are targeting the House Waxman-Markey bill as a threat to the economy because it would raise energy costs.

My pal and superbrain Jon Henke got all excited for a minute when he thought that U.S. Senate candidate in Connecticut Rob Simmons was in favor of a carbon tax where the revenue would be used to eliminate payroll taxes. But then the Simmons campaign clarified the matter:

Never mind.  See the comment section at the news article, where the Simmons campaign manager says “Rob Simmons does not support a carbon tax. He does believe that supporters of “cap and trade” should be more straightforward about their intentions and propose a carbon tax if that is what they desire so the American people can make a clear judgment about the consequences of such a policy – a policy Rob opposes.”

Me:  GOP congressmen Jeff Flake and Bob Inglis have come out in favor of just such a proposal, only to get hammered by anti-tax groups in private.  But as one Republican economist told me recently, GOPers need to get into the game on climate change. And certainly this is one way of doing it that looks proactive, besides either a) denying climate change or b) calling for greater technological research. Here is a bit more from Henke:

We could eliminate the payroll tax and take this environmental issue off the table for Democrats. But no, Republicans are content to keep the payroll tax and settle for complaining about Democrats.

(Lightly microblogging this week from The Great White North)

There is no way this passes US Senate unless it has a tariff that penalizes nations who are not capping climate emissions, such as India and China.  So not only would cap-and-trade create more taxes and regulation, it might spur a bout of protectionism. It is the gift that keeps on giving.

While both healthcare and cap-and-trade look to be in various degrees of trouble, some savvy Capitol Hill watchers make this point to me: Democrats look at failure to do something about healthcare as an Extinction Level Event, with a failure on cap-and-trade also incredibly damaging, particularly with the Dem base.  House Speaker Nancy Pelosi told wavering Dems that a cap-and-trade failure was a dagger in the Obama presidency. She pushed them to the wall. Healthcare even more so.  Expect a full-court press in the Senate on both. At the same, either of those issues slipping into 2010 is fatal to their chances. The next five months may make or break the Obama presidency.

My sources have been unrelentingly negative about the chances of a cap-and-trade bill getting passed, but far less so about a renewable energy standard on electricity providers. So any suggestion to split the Waxman-Markey approach into separate cap-and-trade and RES bills, as  Sen. Byron Dorgan is doing,  is a big negative for capandtraders.  It’s also amazing to see how the current anti-Wall Street sentiment is hurting cap-and-trade because of the perceptions that financial firms will make a mint in the trading of emission permits. Here is a bit from a recent Dorgan op-ed piece:

For those who like the wild price swings in the oil futures market, the unseemly speculation in mortgage backed securities or the exotic and risky financial products such as credit default swaps that pushed our economy into the ditch, this cap and trade plan will be the answer to their prayers.

Just last year, speculators overwhelmed the oil futures market, and every day they were trading 20 to 25 times more oil than was being produced. That speculation drove the price of oil from $60 to $147 a barrel and gasoline to more than $4 a gallon.

Then the same speculators forced the price back down and made money in both directions. The American public paid the price for it.

And remember the financiers who wallpapered America with risky derivatives and credit default swaps that they traded in dark markets before the financial collapse last year? We shouldn’t need a second expensive lesson in how manipulation in financial markets can hurt our country.

Don’t’ get me wrong. I like free markets. But given recent history, I have little confidence that the large financial markets are free or fair enough to trust them with a new, large cap-and-trade carbon securities market.

This bit from an  interview with Nobel Prize-winning economist and climate change worrier Thomas Schelling is a stunner (bold is mine):

Well I do think that one of the difficulties is that most of the beneficiaries [of fighting climate change ] aren’t yet born. More than that: Most of the beneficiaries will be born in what we now call the developing world. By 2080 or 2100 five-sixths of the population, at least, will be in places like China, India, Indonesia, Africa and so forth.  …  It’s a tough sell. And probably you have to find ways to exaggerate the threat. And you can in fact find ways to make the threat serious.

The wonderful Jennifer Rubin of the Contentions blog opines thusly:

By December we will see how attractive a massive energy tax would be. (Talk about a lump of coal in your stocking.) But Boxer is smart to shove this off to the side. Democrats who cast a hard vote in the House and are now being pummeled by conservatives, business and taxpayer groups, and potential opponents (as are the Republican Eight who are in the dog house with the base). Those who supported cap-and-trade despite warnings about job losses and the adverse impact on the already struggling economy (especially in energy-producing states) are finding little support for having placed a pet issue on the liberal wish-list ahead of their constituents’ economic interests. Then the G-8 didn’t help matters either. And really, if the EPA’s own administrator says it will have no effect on climate, what’s the point of the whole exercise?

So this may turn out to be the worst of all worlds for the Democratic House leadership and the White House, who forced vulnerable members to walk the plank for nothing. Environmental groups will be furious if large Democratic majorities and a Democratic president can’t deliver. And yet those members who tried to deliver will be tagged by opponents in 2010 as disregarding bread-and-butter concerns during a recession.

My spin: And is it possible that by year end, there will be no passed and signed climate change bill, no healthcare bill (or merely a rump version) and no financial reform bill? And all Obama would have accomplished is an $800 bill stimulus bill that might well be perceived as a failure given double-digit unemployment?

This report from my Reuters colleagues is a stunner:

WASHINGTON, July 6 (Reuters) – To fairly divide the climate change fight between rich and poor, a new study suggests basing targets for emission cuts on the number of wealthy people, who are also the biggest greenhouse gas emitters, in a country. Since about half the planet’s climate-warming emissions come from less than a billion of its people, it makes sense to follow these rich folks when setting national targets to cut carbon dioxide emissions, the authors wrote on Monday in Proceedings of the National Academy of Sciences. … The study suggests setting a uniform international cap on how much carbon dioxide each person could emit in order to limit global emissions; since rich people emit more, they are the ones likely to reach or exceed this cap, whether they live in a rich country or a poor one. …  Is this a limousine-and-yacht tax on the rich? Not necessarily, [author] Chakravarty said, but he did not rule it out: “We are not by any means proposing that. If some country finds a way of doing that, it’s great.”

My spin: Scary stuff. A green version of (high) tax harmonization. Tax something, you get less of it.  Where do the greenies think all the innovative, high-tech solutions are going to come from, nonprofits?

A great point from Pete Davis over at Capital Gains and Games:

On April 1, 2009, 26 coal and manufacturing state Democrats joined all 41 Senate Republicans in favor of Senator Mike Johann’s (R-NE) amendment to the Budget Resolution, S.Con.Res.13, disallowing the use of “reconciliation” to pass a Climate Change bill.  “Reconciliation” would allow passage by a majority vote instead of the 60 votes normally needed to pass major bills.  It would also prevent extraneous killer amendments.  Some of those 26 Democrats may feel secure enough of their reelection chances to vote in favor of a Climate Change bill this fall, but many won’t.  That’s why I’d be surprised if the Senate can pass a Climate Change bill this year.  I could be proven wrong if President Obama can mount enough public pressure on those 26 Senate Democrats to turn them around, but that would be a tall order.

This is much punchier than “jobs, jobs, jobs, jobs.” James Lovelock (via the Climate Progress blog):

If we can keep civilization alive through this century perhaps there is a chance that our descendants will one day serve Gaia and assist her in the fine-tuned self-regulation of the climate and composition of our planet. We have enjoyed 12,000 years of climate peace since the last shift from a glacial age to an interglacial one. Before long, we may face planet-wide devastation worse even than unrestricted nuclear war between superpowers. The climate war could kill nearly all of us and leave the few survivors living a Stone Age existence.