Last Thursday, I attended a Senate Foreign Relations Committee hearing on Climate Change. James L. Connaughton, Chair of the White House Council on Environmental Quality testified that while the Bush Administration is concerned about climate change, we must be careful in choosing policies to reduce greenhouse gas emissions to avoid harming our economy. He asserted that the Administration has been leading the fight against climate change and that in some instances it has been more aggressive than Congress. Senator Kerry and others questioned this, and in particular pointed out that last December, Bush's veto threat forced Congress to drop standards requiring electric ultitlies to generate a fraction of their electricity from renewable energy. (Thus, Bush killed the most powerful climate change element of the House energy bill.)
Conservation International testified that 20 - 25% of greenhouse emissions come from burning tropical rainforests. What they didn't say is that rainforest clearing is driven by demand for land to grow biofuels and by demand for grazing land for beef production. Question biofuels! Skip a few meat meals this week!
To me, the most interesting testimony came from John Castellani of the Business Roundtable. (BR is an association of the CEOs of the largest corporations in the US.) Castellani outlined BR's criteria for selecting an appropriate policy to reduce greenhouse gas emissions: Cost-effectiveness, flexibility, use of markets, encouraging innovation and technological solutions, minimizing complexity and transaction costs, transparency, predictability, minimizing market distortions.
And he listed the policy options as: carbon taxes, a cap and trade system or regulatory approaches. Yes, in that order.
BR's criteria closely match those of the Carbon Tax Center-- which concludes that carbon taxes would acheive those goals most effectively and fairly. Check out the Carbon Tax Center website which compares carbon taxes with cap and trade using very similar criteria to those the Business Roundtable suggests.
After the hearing, I talked with Castellani and put him in touch with the Carbon Tax Center and vice versa.
Isn't it interesting that the Business Roundtable seems more open to a carbon tax than the enviros or the members of the Senate Foreign Relations Committee? I guess they value transparency and predictability -- big advantages of carbon taxes over cap and trade which would create market volatility and hide the manipulations of those seeking exemptions or free permits. And cap and trade is extremely complex, as the Europeans who are laboring to implement a cap and trade system are finding.