Assisted Economic Suicide

A White House proposal under final consideration, for possible imminent release, would create a national inventory of certain naturally occurring gases — such as carbon dioxide (CO2) — when they are emitted by the combustion of fossil fuels to produce energy. Accompanying the proposed list of “greenhouse gas” (GHG) emissions — and their emitters — would be a “voluntary” regulatory regime. The regime is designed to prompt energy producers, and thus many energy users, to conform to a particular GHG emission profile. In lieu of actually suppressing energy production or consumption, one's prescribed profile can be met by purchasing GHG emission credits. Unfortunately, slowing or idling production facilities also “earns” salable emission credits. In other words, the White House wants us to believe that Party A will “voluntarily” give good hard cash to Party B in order to purchase carbon dioxide credits. But in a “voluntary” system that forces no one to participate, such credits are absolutely useless. Sure, who wouldn’t want to “sell” such illusory “credits”? The real questions are: Who would buy them? And why does this require action on the part of the government? The White House is pondering this proposal on the false premise that it is better to appear to be “doing something” as opposed to “mere research” on the issue of climate change. The administration hopes this will appease the green lobby and Europeans, offering some payback to the latter for cooperating with United States efforts to protect the world from terrorists. The proposal is troublesome mostly because a voluntary emissions credit system is a prima facie absurdity, serving no function but as a predicate to mandatory CO2 caps – i.e. energy suppression. Lessons Never Learned The push for this “voluntary” proposal is eerily reminiscent of the first Bush administration’s promotion of the 1990 Clean Air Act Amendments (CAA). These were also pursued on the false belief that environmental pressure groups will lay off the hysteria in return for anything shy of total capitulation. That legislation instituted the “acid rain program,” requiring expensive controls on actual pollutants (unlike CO2). At the time the first Bush administration green-lighted the 1990 CAA, a costly government assessment of potential pollutant controls was imminent, though not expected in time for the elections. Critics of the amendments suggested that maybe action should wait until it could be predicated upon the knowledge in the assessment. The critics lost. But 10 years later, that assessment’s findings were proved correct – the controls did not reduce lake or river acidity. This goes down as one of the greatest follies in U.S. environmental policy. That distinction may soon honor a carbon suppression program. Political Folly Despite rumors of a negotiated rhetorical cease-fire, the administration seems oddly optimistic in presuming the environmental lobby’s reaction to a “voluntary” program. It is fairly predictable that green groups will spin the voluntary program as a sweetheart deal for industry buddies to police themselves, since this proposal springs from what was originally a pet idea of Enron. Worse, the entire impetus for the administration endorsing voluntary emissions is spin – “see, we’re ‘doing something’ about global warming!” This, albeit with a sad but fitting irony, will backfire, giving the political enemies of the White House something to spin against them. Veteran congressional staffers learning of this plan – as usual, not from the tight-lipped White House, but from outside sources – are in wide agreement that an emission registry and voluntary program will prompt two major legislative defeats for President Bush. First, Tom Daschle’s “alternative” to the bipartisan energy bill is laden with climate programs. But it will now look attractive by comparison with a registry and emission-trading scheme. Bush allies would smartly opt to cut deals with Daschle and abandon Bush’s energy plan. Second, it will also pull the rug out from under the President’s allies planning to protect him from signing Sen. Jim Jeffords’ carbon cap legislation – a domestic Kyoto plan – since Bush will have ceded a need to act on carbon. Ironically, with the Kyoto Protocol increasingly collapsing under its own shoddy design, the U.S. would be the first and sole country to institute mandatory controls. Even market-based schemes like “cap-and-trade” cannot escape the obvious: the Congressional Budget Office reported in June that cap-and-trade is in reality a burdensome energy tax. The White House is about to propose a very shortsighted idea. Here’s hoping some current administration officials remember the mistakes of the father and provide wiser counsel to the son.