"Cap-and-Trade is Dead"

Sydney M. Williams

Thought of the Day

“Cap-and-Trade is Dead”

July 27, 2010

“The King is dead. Long live the King!” This proclamation (originally French) was traditionally used once a new king ascended the throne vacated by the death of his predecessor; the term suggested continuity. Cap-and-trade was officially buried on Friday when Senate majority leader Harry Reid said he did not have the votes to pass legislation; given that the November elections will certainly reduce the majority Mr. Reid has in the Senate, this was probably his last chance to muscle through this particular piece of legislation. In this case, at least for the next few years, the King is just plain dead.

The Left have been masters of using crises – what Ross Douthat has described as apocalyptic enthusiasms – to push through major government-run programs. Obama-Care and finance reform have passed, albeit on a partisan basis. Cap-and-trade was to be another such proposal.

In many respects it was the “e-mailgate” episode at East Anglia University late last year, which raised questions as to the validity of the science, the dismissal of doubter Freeman Dyson of Princeton as a “crank”, and the failure in Copenhagen to reach an acceptable, universal accord last December that sounded the death knell for cap-and-trade.

The reaction has been unsurprising – relief on the part of the conservatives and castigation by the Left for those who failed to heed the call of the environmentalists. Paul Krugman, the venomous mouthpiece of liberal causes, blames, in an op-ed in yesterday’s New York Times, “the usual suspects: greed and cowardice”, by which he means oil companies like Exxon Mobil and Senators like John McCain.

There is a general, but not universal, belief that the earth is warming. The debate surrounds man’s culpability and what, within reason, can be done about it. The United States remains the world’s principal consumer of energy, both on a per person basis and in aggregate. So it is unsurprising that we are the target. However, our energy efficiencies are improving. Even without cap-and-trade and with that FOOC (friend of the oil companies), George Bush, in the White House, energy consumption per person in the U.S. declined by 11% over the past decade, while GDP rose 45%.

Environmental awareness is a function of wealth. The first environmentalists, unsurprisingly, were members of the eastern establishment, President Theodore Roosevelt being the most famous example. Rich countries, like rich individuals, can afford what others cannot. Scrubbers for coal fired utility plants, waste treatment facilities, re-claimed land from open-pit mines, energy efficient appliances, once luxuries have become necessities. The primary need of the developing world, as Bjorn Lomborg has made clear in a series of op-ed pieces in the Wall Street Journal, is to generate wealth. As I wrote on this subject last December, the needs of poor nations: “Clean water, proper sewage and enough food are their priorities. The environment, of necessity, is at the bottom of the list.”

It would be wrong to dance on the grave of cap-and-trade. To the extent that man disfigures the earth, he should be held responsible, as the BP spill in the Gulf makes clear. Poorer nations have neither the luxury nor the leverage to demand equivalent restitution, as the natives in the Niger Delta know too well. Poor people in poor lands are consumed with the process of living. Their time horizons extend to the next meal or to the end of the day; they cannot afford to worry about the consequences ten years out. Ethically, the benefits to future generations must be weighed against the costs to current generations.

The best thing we can do for the environment is to help poor nations develop their resources and join the developed world. Environmental improvements are spun from wealth, not from government mandates. As nations become richer, they first consume more energy. As wealth increases, and if they are democracies, the balance begins to shift to conservation and the desire to live a healthier life.

Technology makes the transition to less dependency on fossil fuels more likely and easier –catalytic converters, nuclear plants and perhaps even solar panels. Initial investments require government assistance to defer some of the costs. Government has long partnered with business. NASA and the military are the best examples, but so were the rail, telegraph, telephone and auto industries. On the other hand, government programs, such as the ethanol lobby, designed to reduce gasoline consumption have proved exorbitant and have done little other than raise the price of corn for the rest of us.

It doesn’t take a stretch of the imagination to assume that man impacts his environment. The question is how much. Over millions of years the earth has warmed and cooled thousands of times; it has been doing so long before man evolved from his ancient ancestors. As a “thinking” beast, man has a responsibility to do as little damage as possible to his environment. But those of us who were fortunate to have been born in this place and at this time should not deny the benefits we enjoy to those who are just now emerging from centuries of poverty. Government actions which promote economic growth will do far more for environmental causes than government mandates. “Who cooked the Planet?” asks Mr. Krugman, in yesterday’s essay. A good question. The answer may tell us who created the universe.