The Sustainable Life

Quick post about the current bills in the USA Congress to address climate change.  I like the titles of both bills.  The House bill (Waxman-Markey) is officially titled The American Clean Energy and Security Act, and the Senate bill (Kerry-Boxer) is titled Clean Energy Jobs and American Power Act.  Note how the bills emphasize “Clean Energy” and some other important buzz words: jobs, power, security, and American.  The political reality is that not only does clean energy have potential far-reaching impact, but it also needs to be packaged in a more palatable form to the American public.  That’s fair.

Both bills approach climate change mitigation using a wide variety of tactics.  This includes overall improvements in energy use efficiency on multiple levels, research for developing renewable sources, and a cap-and-trade system for reducing the levels of greenhouse gases (GHGs) that are being emitted within the borders of this country.

Cap-and-trade might be the least controversial method for lowering emissions because it allows the cost of the reduction to be determined by market forces.  GHGs producers would be allotted a certain amount of permissible emissions, and producers could trade emissions between each other depending on their needs. In an economic sense (and bear with me as I’m just beginning to learn the ins and outs of this), cap-and-trade works on the premise that the cost of reducing GHGs is variable between companies because of how they operate and what technology is available for them to adapt.  This cost is technically referred to as the marginal abatement cost.  Cap-and-trade takes advantage of this variation by allowing companies to trade GHGs emissions between each other to mitigate costs while bringing the overall amount of GHGs emitted to a prescribed level.  The overall economic cost is minimized (the companies with cheaper costs reduce emissions more) and the emissions reductions are maximized through market forces.

Of course, this is an ideal case.  It remains to be seen if Congressional legislation could actually be written that would take full advantage of a cap-and trade system.  Problems could arise if the restrictions are too lax, too strict, or simply impossible to enforce.

Cap-and-trade is just one part of the current Congressional bills tackling climate change.  But it is the most complicated, and is likely the part that is going to come under the most fire in debate.  The biggest criticism is that it will hinder economic activity by increasing the cost of doing business.  This is true, but at least the companies have a choice as to where that cost is spent.  A carbon tax would not guarantee a reduction in emissions, and the money spent would be put directly into the government coffers while not in producing a more sustainable company.

In the end, such legislation may never be enacted into law.  The Kerry-Boxer bill is stalled in the Senate, and our newly elected Senator from the state of Massachusetts is against cap-and-trade.  This could make a Republican filibuster very likely indeed.

This entry was posted on Wednesday, January 20th, 2010 at 10:52 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.