Why cap-and-trade crashed and burned

I thought most of this week's reporting and analysis on why the new bill to curb greenhouse gas emissions failed in the Senate was a bit thin. It's true that nobody expected it to become law (it was heading for a veto in any any case), but it mustered surprisingly little enthusiasm even so--raising doubts about its prospects next year, despite the fact that a well-disposed president will be in the White House. This is another plug for National Journal, if you'll allow me, but the column by Ron Brownstein clearly explains what went wrong.

The bill would have established enough boards and regulations that the chamber was able to distribute a devastating chart, modeled on those used against Hillary Rodham Clinton's health care plan in 1993, that portrayed the proposal as an impossibly tangled hedge of new bureaucracies... [It] provoked unexpectedly stiff opposition on a related front. Under the measure, Washington would distribute about half the credits to emit greenhouse gases for free and would auction the rest--yielding an estimated $3.4 trillion in federal revenue over the next 40 years. Republicans such as Sen. Lamar Alexander of Tennessee derided that money as a "slush fund" that would enable massive spending on causes far beyond clean-energy research... To pass, the reworked bill will need to focus more tightly on subsidizing new technology and providing tax cuts to moderate-income taxpayers to offset the higher energy costs it will trigger. That raises the final problem. Amid soaring oil prices, proponents faltered before critics' charges that the measure would inflate energy bills.

I've just finished writing a column of my own on energy policy that will be in Monday's FT. (You'll be able to read it here too, of course, once it goes live.) It develops and endorses Ron's concluding thought:

U.S. environmentalists won't recover from their Senate debacle unless they candidly ask Americans to bear somewhat higher energy prices now, as the cost of building a more economically and environmentally sustainable future for their children.

This article available online at:

http://www.theatlantic.com/business/archive/2008/06/why-cap-and-trade-crashed-and-burned/8551/