Recently I had a novel experience: Actual hope that liberaltarianism might have positive future. Even more uncharacteristic than the emotion was its trigger, a perfectly sensible New York Times(!) article praising the success of the 1990 cap-and-trade acid rain program as a model for successful market-based environmentalism:
Most famously, a 1990 bill signed by the first President Bush forced coal plants to buy permits if they were going to emit the sulfur dioxide that caused acid rain. With the price of emissions suddenly higher, the plants looked for innovative ways to reduce pollution — and succeeded more rapidly and cheaply than experts had predicted.
This history is the basic argument for putting a price on carbon today, and the next several weeks are likely to determine whether that happens. The chances of Congress’s passing a permit — or cap-and-trade — system that applies to the whole economy are low. But it could still create a version that covered power plants, if not factories and transportation. That would be no small thing.
David Leonhardt, Saving Energy, and Its Cost, N.Y. Times (June 15, 2010). But the best part of the article was the following quote:
"Instead of leaving it up to the government to identify the solution and tell people what to do, you are leaving that decision to the people who know best," says Nathaniel Keohane of the Environmental Defense Fund. "A bureaucrat would never have enough information to do as good a job."
Id. If hard-core environmentalists at EDF can understand and unashamedly say this, there could be hope for cooperation and sensible policy. However, this week we are informed that:
The original U.S. cap-and-trade market, which succeeded in slashing the power-plant emissions that cause acid rain, is in disarray following the issuance of new federal pollution rules.
The collapse in the pioneering market where power producers trade permits that allow them to emit sulfur dioxide and other pollutants that cause acid rain comes as policy makers seek to establish a similar market to curb the emissions of carbon, a cause of climate change.
The acid-rain market has struggled for the past two years as utilities, states and investors waited for the Environmental Protection Agency to issue new rules. The rules, released last week, put tougher limits on emissions by power plants but rely less on trading. As a result, the allowances that utilities now trade to allow them to emit sulfur dioxide are expected to become worthless.
Mark Peters, Changes Choke Cap-and-Trade Market, Wall St. J. (July 12, 2010). (h/t Greg Mankiw). Apparently they were just kidding about seeking market-based solutions.
If thanks in part to the good-faith support of environmentally inclined libertarians—a small but not entirely uninfluential group— any form of carbon cap-and-trade or Pigouvian carbon tax is enacted, expect to see a Bobby-Bird style command-and-control regime to be imposed on every activity generating CO2, one of the most common substances on earth, within 15 years.
