News
U.S. Democrats backing away from cap-and-trade

May 11, 2009 – Dr. Stephen Murgatroyd, Troy Media Corp.

U.S. President Barack Obama's cap-and-trade proposal is in trouble with Democrats in Congress.

The most recent Democratic deserter is the Chairman of the powerful Agriculture Committee, Colin Peterson (D: Minn). Sen. Benjamin L. Cardin (D-Md.) called cap-and-trade "the most significant revenue-generating proposal of our time."

Even scientists like James Hansen and John Lovelock – the leading climate
alarmists in the world – oppose the cap and trade legislation. In their view, the cap-and-trade approach is both "ineffectual" and "verging on a gigantic scam."

Several technical analysis of the potential impact of the cap-and-trade legislation in the US suggest that a full implementation and adherence to the emissions restrictions provisions described in the Waxman-Markey Climate Bill would only result in setting back the projected rise in global temperatures by a few years -a scientifically meaningless prospect. But even this insignificant result assumes a reduction of U.S. greenhouse gas emissions of greater than 80 percent, as envisioned in the Waxman-Markey bill. If implemented, cap-and -trade would produce a global temperature "savings," during the next 50 years, of about 0.05 degrees C, assuming India and China also started to cut emissions.

Senator Jim Inhofe – the Senate's resident climate change skeptic, believes that the cap-and-trade will raise $400 billion for the US treasury, but also increase energy costs for each family by approximately. $3,000 a year and lead to some 800,000 job losses. Pointing out that the vote on this part of the Obama's budget secured just 39 votes in the Senate – 60 are needed for the legislation to become law – Inhofe makes clear that he thinks that the cap- and-trade scheme is "dead in the water."

The European Union's experience suggests that cap-and-trade, unless carefully enacted and enforced, leads to some people becoming quite wealthy, most people becoming poorer, with almost no impact of carbon dioxide emissions. A pharmaceutical company in France, for example, has switched its core business from producing health products to selling carbon credits because it's more profitable. It continues to emit exactly what it emitted before the scheme began.

In place of cap-and-trade, some law makers in the US are beginning to tout the idea of a carbon tax –along the lines of that implemented in British Columbia. This too is dead in the water. Almost all law makers are opposed to a carbon tax, arguing that it would have substantial negative impacts on the economy in general and "ordinary" families in particular. While the promise is that other taxes would be reduced, the reality of the US debt-ridden economy cannot afford it: the US government needs all of the tax revenue it can get.

Obama has committed to reducing carbon dioxide emissions to 1990 levels by 2020 –a 14 percent cut from current levels –and then cut a further 80 percent of the 1990 C02 emissions by 2050. The International Panel on Climate Change (IPCC) has already said that the 2020 target is far too low and should be nearer 25 percent. The target is important because it is a reflection of Obama's commitment: unfortunately, it is the lowest target set by any G7 nation. It also represents what Obama thinks is realistic – something other countries do not seem to take into account when setting targets (almost none of which are ever met).

What happens if the cap-and-trade legislation does indeed fail? Well, Obama's secret weapon is the Environment Protection Agency (EPA), which has ruled that CO2 is a pollutant and falls within their sphere of responsibility to regulate.

The EPA is a blunt instrument which will enact regulations within existing legislative frameworks, which do not require Congressional permission. With the death of cap-and-trade, look for the EPA to begin to develop regulations focusing on major polluters first, most likely targeting the coal industry and coal fired energy plants. In fact, it has already placed a hold on several coal fired powered plants which were about to be approved. Look to see buildings and emissions from the transportation sector to also come under their guns.

Because of its failure to pass cap-and-trade and its very modest emissions target, it is unlikely that the US will be the lead country in negotiations during the December Copenhagen Climate Change global summit.

Instead, it will be the EU that will lead. According to several diplomatic sources, however, preliminary work on the summit is not going well. The faltering US legislation and low targets, coupled with the continued challenge by China and India over their role in climate change and the implications of establishing global targets, are challenging diplomats to find a meaningful compromise. Another challenge is the demands of developing nations for an annual payment of $600 billion to compensate them for the impacts of climate change, largely driven by the developed economies. Copenhagen will be a battle, and largely symbolic.

The good news is that it is getting cooler, the global climate is well within its normal range, the arctic ice is getting thicker and there is growing recognition that climate alarmists, who base most of their arguments on climate change models rather than actual observations, are being revealed as exaggerators and polemicists. It will be an interesting period between now and the end of the year.