Comment on Addressing Climate Change With a Comprehensive U.S. Cap-and-Trade System
| Date | 01 August 2009 |
| Author |
8-2009 ENVIRONMENTAL LAW AND POLICY ANNUAL REVIEW 39 ELR 10767
Comment on Addressing Climate
Change With a Comprehensive
U.S. Cap-and-Trade System
by Richard E. Ayres
Richard E. Ayres is the founder of the Ayres Law Group in Washington, D.C.
Robert Stavins has performed a great and valuable pub-
lic service by his role in moving cap-and-trade from
an academic idea to real-world policy. Since the 1980s
Stavins has tirelessly promoted the idea that the nation could
have cleaner air at less cost if national policymakers would
establish gradually shrinking emissions caps on pollutants
and allow emitters to make their own decisions about how to
adjust to t his cha nge in their market environment. Stavins’
recent article Addressing Climate Change With a Comprehen-
sive U.S. Cap-and-Trade System 1 makes the case for cap-and-
trade as the means to address global warming.
Having spent a great deal of my professional time in the
1980s working to shape a cap-and-trade program to control
acid rain and convince Congress to adopt it, I agree with
much of Stavins’ argu ment. I take issue only where it seems
to me that Stavins stakes too grand a claim for cap-and-trade
as a response to global warming.
I. The Chimera of a “Simple Tax on Carbon”
Like Stavins, I prefer a cap-and-trade program to what propo-
nents insist on calling a “simple tax on carbon.” At the most
basic level, a tax exchanges greater certainty of cost for greater
certainty of achieving the emission reductions required to
protect our planet from unacceptable climate change. ose
in Congress currently advocating a tax either have forgot-
ten Americans’ resistance to new taxes, or are disingenuously
seeking to torpedo adoption of climate legislation.
I would emphasize that it is not appropriate to compare a
program that has begun the process of political compromise,
such as last year’s Lieberman-Warner cap-and-trade bill, with
an abstraction. No one who has ever done his income tax
would believe for a minute that a real carbon tax bill would
be “simple.” A real carbon tax bill would be subject to the
same pulling and hauling of the same interests that had their
1. Robert N. Stavins, Addressing Climate Change With a Comprehensive U.S. Cap-
and-Trade System, 39 ELR (E. L. P’ A. R.) 10752 (Aug. 2009)
[hereinafter Stavins 1]. is review also beneted from a review of a longer
paper by Stavins for e Hamilton Project of the Brookings Institution, A U.S.
Cap-and-Trade System to Address Global Climate Change, (Oct. 2007) [hereinaf-
ter Stavins 2].
impact on the Lieberman-Warner bill a nd will have their
eect on this year’s proposed legislation. Furt her, because a
tax bill would be written by the tax committees of Congress
rather than the environment committees, it would almost
certainly be tilted more towards economic interests than
environmental protection.
Stavins is right that the two systems have a great deal
in common in concept, and his article neatly describes t he
conceptual and practica l dierences. I agree with him that
the real issue is “which is more politically feasible” as well as
“which is more likely to be well designed.”2 In my view, the
answer to both is cap-and-trade.
II. Gradual Imposition of Auction
I agree also that the auction of allowances should be phased in
gradually over a period of years in order to allow adjustment
to the increase in costs faced by industries heavily dependent
on fossil fuels and by those products (such as hydrouorocar-
bons) with high global warming potential. In order to allow
the economy to adjust to these changes, Stavins suggests a
25-year period for phasing in a full auction of carbon allow-
ances. It may be possible to move more quickly, especially if
a generous oset policy is adopted such a s that urged by t he
United States Climate Action Partnership.
III. No Statement of Cost of Not Acting
Opponents of global wa rming legislation often point to the
costs of cur tailing greenhouse gas emissions as if the a lter-
native carried no costs. I fear Stavins’ concentration on the
costs of reducing emissions of greenhouse gases may play
into the hands of these opponents. 3 I understand he is mak-
ing the point t hat it is important to pick an ecient pro-
gram architecture. But responsible ana lyses sugge st that the
societal costs of reducing our carbon footprint may be mini-
mal. at is the implicat ion of the famous McKinsey table,
2. Stavins 1 at 10764.
3. Stavins 1 at 10752 (“there should be no mistake about it—meaningful action
to address global climate change will be costly”).
Copyright © 2009 Environmental Law Institute®, Washington, DC. reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.
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