Is a Full-Economy Cap-and-Trade Program Dead in the Water?

Eli is a contributing correspondent for Science magazine.

Progressive David Roberts of Grist argues that Senator Lindsey Graham's (R-SC) retreat on comprehensive energy legislation is the death knell for an economywide system that caps industrial carbon dioxide emissions from all sectors. The alternative would be a cap that covers only a portion of the electricity sector:

Graham’s comments seem to point to an alternative that’s been much-discussed recently: a scaled-back cap-and-trade program that would cover only the electricity sector. That would be coupled with some version of the (pitifully weak) American Clean Energy Leadership Act passed by Bingaman’s Energy Committee last year, with additional subsidies for offshore drilling and nuclear power.

Would the resulting bill be worth a damn? Put it this way: it would be possible to craft a good package of climate and energy legislation with a cap-and-trade system covering utilities, ambitious renewable energy mandates, stringent energy efficiency regulations, and a massive round of investments in clean energy.

That’s not what will pass.

My prediction is that whatever K/G/L come up with will look more or less like energy policy over the last 20 years: a hodgepodge of subsidies and tax breaks for favored industries. At this point there seems little hope left of anything better.

Electricity generation makes up roughly a third of U.S. greenhouse gas emissions. Focusing on that sector alone with a cap-and-trade program would make reaching Obama's Copenhagen pledge of a 17% cut in U.S. emissions by 2020 very difficult indeed.