‘The Story of Cap and Trade’: This Moment Demands Better Solutions

The subtitle of The Story of Cap-and-Trade—the short film released this week by The Story of Stuff Project, Climate Justice Now, and the Durban Group for Climate Justice—is “Why you can’t solve a problem with the thinking that created it.”

Our goal in releasing the film was to make a simple point: Climate change is, as Lord Nicholas Stern, author of the Stern Review on Climate Change, noted, the largest market failure we have ever known. And yet, in spite of this, we’re looking to cap-and-trade, a “market solution” that has failed to deliver results, in a time of grave economic crisis, to save the planet from an environmental meltdown.

The film—for which I was a content advisor—has generated significant discussion on Grist (see here and here) and elsewhere, and we’re glad for that. If there was ever an issue that merited broad, even heated, public debate, this is it. We’d far rather people argue about cap-and-trade and other policy options than ignore them or silently go along with the crowd, even when their guts tell them the solution on the table is inadequate to the task.

In recent years, groups such as mine and many others have worked with allies on Capitol Hill to advance a set of principles that would have gotten us to 350 parts per million CO2—the level scientists have identified as the safe upper limit for CO2 in our atmosphere—without carbon offsets, without nuclear power, without international carbon trading, and with environmental justice protections.

But these principles were dismissed by some of our erstwhile allies as wildly unrealistic, and we were all told to stand in line instead behind the big boys and accept a bill introduced by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.) that allowed for 2 billion tons of carbon offsets—a staggering figure that would mean no verifiable emissions reductions by the U.S. for about two decades—among other outrageous giveaways to the coal and nuclear industries and no mention of a target of 350 parts per million CO2.

The definition of “renewable energy” under the Waxman-Markey bill was transformed from the solar panels and windmills of our dreams to the biomass and waste incinerators of our nightmares. The EPA’s authority to regulate large coal burners was gutted. The giveaways were duplicated, with minor modifications—primarily in restoring EPA authority (though that, too, was a bargaining chip, Sen. John Kerry (D- Mass.) offered up)—in the Senate bill that was introduced by Kerry and Barbara Boxer (D-Calif.). Here’s a full detailed critique of the Kerry-Boxer bill delivered by various public-interest, environmental, and faith-based groups.

Currently, the Kerry-Boxer bill has stalled. While the health-care and financial-reform debates are a factor, it is also likely it has something to do with public opinion. The U.S. Climate Task Force and Future 500 just released the results of a new poll by Hart Research that found Americans favor a carbon tax over cap-and-trade by a margin of two to one. The poll found support for a tax over cap-and-trade in all age and income brackets. It also found support for cap-and-trade was lower among those who paid the most attention to climate issues.

Dr. Elaine Kamarck, a former senior policy advisor to Al Gore and current co-chair of the Climate Task Force, explained:

This poll reveals that only two percent of voters hold a very positive view of cap-and-trade—the system at the core of the current Senate bill. But it’s not too late to salvage the situation. With both the U.N. and the Senate delaying major climate debates until next year, policymakers now have time to make a serious course correction in the emissions debate.

Thankfully, that course correction is already underway. We understand that Sen. Maria Cantwell (D-Wash.) is prepared to introduce legislation along with others on both sides of the aisle that might address some—if not all—of the architectural flaws of the cap-and-trade approach. Cantwell has attempted to do what many have been saying was necessary all along: respond to the legitimate concerns that have been advanced about carbon markets. Cantwell’s office describes her “cap and dividend’ approach,” called the “Carbon Limits and Energy for America’s Renewal” or CLEAR, in this way:

Simplicity, transparency, and equity are the hallmarks of the 33-page CLEAR Act. The legislation combines novel design elements, including an upstream cap on fossil carbon as it enters the economy, a hundred percent auction open only to energy producers and importers (and not Wall Street) with prices set by the market within a bounded price collar, and equal monthly distribution of auction revenues to every American.

Funding is also dedicated to climate related needs such as clean energy R&D, programs that mitigate non-CO2 greenhouse gas emissions, and need-based, regionally-specific assistance for communities and workers transitioning to a clean energy economy.

The CLEAR Act’s upstream cap declines gradually at a predictable and economically optimal rate, providing fossil fuel users certainty while still reducing greenhouse gas emissions 80 percent by 2050 without relying on free allowances to industry, unverifiable offsets, or other giveaways.

However, Cantwell’s bill would only result in 5 percent emissions reductions below 2005 levels by 2020 (for CO2 only). There are ways of strengthening this, such as having mandatory phase-outs for other greenhouse gases, and using stronger energy-efficiency and renewable-energy targets as contained in the Waxman-Markey bill. But it won’t get us far enough as is and so we’ve got to do more.

And that’s the point. Now is not the time to go along, hat in hand, with what some say is “the best we can get.”

We’ve got to ask for what we and the rest of the planet need.

The stronger the demand for real solutions—solutions that achieve ecological sustainability and do so fairly—the easier it will be for those in the political process to inch in that direction, too. Let’s continue the discussion, welcome the voices of those most impacted by climate change, invite in businesses that are serious about sustainability, and encourage our leaders to follow our lead.

Daphne Wysham is co-direcor of the SEEN project at the Institute for Policy Studies.