Blog cafe : Cap ‘n’ trade

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: There is a nice article from Darren Samuelson that addresses one of the fundamental obstacles that any climate legislation will face in moving through Congress: namely, the size and complexity of any legislation is going to make it difficult to pass, but ‘simplifying’ the legislation seems impossible given political exigencies.

At the end of the day I don’t see any bill getting passed that is significantly simpler than Lieberman-Warner... Legislators are not going to hand EPA a blank check to write regulations for the biggest piece of environmental legislation in history.

The bill did many things right: eg: it was economy-wide (covering most emissions in the economy) and it moved towards auctioning most allowances (although perhaps too slowly). There are many ways future legislation could be improved:

Auction all allowances, and specify how to carve up the money. You are going to have to buy off special interests in order to get legislation passed but it would be more transparent to structure this as a straight subsidy.

Fund R&D, particularly early stage basic and applied research. Limited funding, if any, for technology deployment.

Fund infrastructure: get in place the networks that will enable technology deployment. Upgrade the electric grid, fund mass transit.

Link domestic targets to international actions, particularly from China and other major trading partners. Promise to do more if they take action to reduce emissions.