The first Climate change legislation this year,is from Connecticut Representative John B Larson.That the US will pass Climate Change legislation is guaranteed, there are easily enough votes for it, and the US should pass it this year. Really? I hear you ask incredulously, the stimulus didn’t work out so well and that had a strong public backing, what makes you so sure?
Firstly the House, a strong Democratic majority wielded by Nancy Pelosi ensures a largely easy ride for the Obama administration. This was further underpinned by the success of Waxman over Dingell for the Chairmanship of the Energy and Commerce committee, marking the changing winds in Washington with regards to Climate Change. Waxman has been vocal in his support for more aggressive approaches to tackling Climate Change issues and will be be a key ally for the administration when it hopes to tackle Climate Change this year.
Second and more critically is the potential in the Senate. Last year a Climate Change bill gained only 48 votes, with 6 supporters absent, this year we ought to be more confident. Last year, was slightly moot, since Bush would probably have vetoed it anyway. However, President Obama has spoke consistently throughout his campaign of the need for Climate Change legislation, yet it was his opponent Senator McCain who could have the final say. As a Presidential candidate, Senator McCain was candid in his support for cap and trade, and it could be his support that brings in the votes. His prominence in the media will break the potential unaninmatyamong Senate Republican ranks in opposing legislation and would then need only one other Republican or a seated Franken to avoid a filibuster and pass legislation.
However, before we get too enthusiastic, the economy will prove a mitigating factor, if the economy has not bottomed out, Democrats will not risk adding a potentially economically destabilising Climate Change policy, so we may be looking at autumn 2009 for the legislation to actually pass.
That being the case, what legislation will it be. There appears to be two divergent views on Climate Change policy, cap and trade or a Carbon Tax. The latter is barely mentioned and yet will be
I wrote previously about the role of Cap and Trade in Europe, noting cuatiously that it appeared to be working. However, there are some convincing argument that a Carbon tax is superior.
With the following points:
1. It is simpler – a tax rather than a complex trading system.
2. Avoids potential pitfalls of the Cap and Trade system, seen to some extent in Europe with carbon offset loopholes, over-issuing of permits to allow companies to cash in, and a failure to include all industries.
3. Carbon tax, could be a more market based solution – if rather than a top-end regulation of polluting industries, it simply incentivises consumers throughstandard price mechanisms ( a company would have to raise the cost of its goods to to match the lost revenue to taxation)
4. It would not actually cost consumers more assome proponents argue companies are taxed at the source and the profits are passed on to consumers either through tax-reduction or a rebate.
But as the NYT article notes, Larson’s attempt is doomed to failure.
“Tax” is a terrible word in politics and even if this carbon tax actually resulted in no net increase in taxation on the individual, it would sound bad in the good times and even worse in the bad times. It would also bring to some extent the cost of Climate Change to the American consumer, ( price hikes across the board), where as Cap and Trade, is more indirect.
Perhaps then the fork, is imaginary, while his timing appears terrible, Larson ought to be given some credit for raising the issue again even if he won’t get any public debate. I have yet to come down on which policy is best but that the US needs to implement policy this year is of paramount importance, if a global agreement is to be fored.
