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Horner Op-Ed in National Review Online
February 12, 2002
President Bush eschewed domestic-program specifics in favor of a "thematic" first State of the Union address. This ensured that his message would be unimpeded by nattering over efforts unrelated to the war on terror. Media relapse into, for instance, the "Republicans assault environment" template would have been guaranteed had Bush given a standard, detailed laundry list. The times called for a different approach.
Having made his case for an economic stimulus and for taking the fight to "Bush Doctrine" violators, however, the president is now chambering a series of the kind of detailed domestic-agenda items that formerly were crammed into applause lines.
A major environmental proposal is imminent, as policymakers desperately cobble together items designed to win positive green press, in order to balance the hysteria expected to surround the necessary reforms.
The administration has convinced itself it can win green kudos by larding up a broad "climate change" action program as an alternative to the Kyoto Protocol. This would include mandatory reporting of carbon-dioxide emissions, even though this naturally occurring gas is not a pollutant. The plan will enact a government scheme for "voluntary" reduction and trading (purchase) of "credits" of CO2 emissions, ostensibly in order to reduce the volume of emissions reported under mandatory requirements — that is, to look green. CO2 trading under a cap (as called for by the Kyoto Protocol) amounts to an inefficient energy tax, according to the Congressional Budget Office. Presumably, companies will voluntarily transfer wealth for symbolic paper.
The apparent CO2-emissions trading scheme tracks the recently enacted British program for voluntary industry commitments. Germany also has a voluntary Kyoto program, but so far without trading. And in a development privately trumpeted by White House aides, Japan affirmed that it cannot meet its Kyoto requirements and so will pursue a voluntary Kyoto program. The Bush administration believes it will get media and green praise for "doing something" — ostensibly because it's what certain Euros are doing; they, after all, know all about guilt-induced anti-growth measures.
But the administration misses a critical nuance. The Brits, et al., merely get a temporary pass for creating a "voluntary" system based on the regulatory model (that is, by promising to also ratify and implement Kyoto as the greens demand). Indeed, the European Union insists that all member-state programs become mandatory controls by 2005, and that all Euro-nations avow ratification sometime this year. Japan's diet is to take up ratification soon. Not that our moralizing allies require any assistance posing as models of climate virtue, but there's no need for the administration to aid and abet them.
Leaving aside that a voluntary program is nothing but a preliminary to mandatory controls, why else is it so foolish? To begin with, ridicule is due any program expecting Party A to voluntarily transfer wealth to Party B for "property" lacking apparent value. This program will merely inflame everyone. The greens will savage it as "doing nothing" (and "leaving it to Big Energy"), even while the scheme continues to legitimize the theory that CO2 emission reductions must be forced.
And why the government regime to "create" a voluntary program — a particularly silly prospect given that a voluntary system demonstrably exists? Led by, ahem, Enron, such transactions have occurred for several years — driven, like any future sales, almost entirely by speculation over a mandatory system. Then these credits, which typically sell for about $1 per ton, would be worth (according to most estimates) anywhere from $100 to $150 dollars. That's a tremendous return on investment, and the reason companies with underperforming stock and aspirations of trading (read: selling) — such as Enron, DuPont, and Cinergy — so vigorously urge "action."
This only reaffirms the obvious fact that any "voluntary system" will soon become a mandate. The more companies speculatively accumulate credits which, under a cap, would be worth a relative fortune, the more pressure the well-heeled lobbying community will bring for a cap. The leap is hardly great. This lobby will decry having "done the right thing," only to still have no worth attached to the fruit of their do-goodery.
The Bush administration should be wise enough to avoid this trap.