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Cap-n-Trade: WaPo’s Mallaby Doesn’t get it



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The Washington Post’s Sebastian Mallaby weighs in today against the U.S. pursuing cap-and-trade schemes like the one that Europe is stumbling over in pursuit of its Kyoto Protocol promises, in favor of carbon taxes or simply capping human emissions of the largely naturally produced gas. His reasoning is that this simply establishes games for wealth transfers among the rich.

While rejecting cap-and-trade is an easy call, Mallaby makes his “instead” recommendation in the last paragraph and without support; presumably readers would be persuaded by the weight of his assault on cap-and-trade combined with the truism with which he opens the piece: “Politicians have stopped denying climate change” (sic: this seems likely just shorthand for “anthropogenic climate change”).

Yet, oddly, nowhere does Mr. Mallaby expose, dissect, or even manifest an understanding of cap-and-trade (other than it is a wealth transfer and bad). Instead, he buttresses his claim that cap-and-trade is the wrong way to go by assailing…Kyoto’s Clean Development Mechanism. This is an inapposite argument against a domestic version of cap-and-trade, as no scheme would conceivably include “CDM” or its equivalent practice. CDM– which involves non-parties to a cap-and trade scheme — is a completely distinct mechanism from the transaction summoned by the phrase “cap-and-trade”, authorized under Kyoto’s Article 12 and under which Kyoto’s 34 covered countries can build projects that result in emission reductions in the 100+ exempt countries to obtain credits just as if they reduced emissions (Cf. the distinct Article 6, which implicitly sanctions the “trade” portion of “cap-and-trade”). You will not find even a hint of this in Mr. Mallaby’s piece.

Facially, this seems an innocent lapse from a columnist, if one who frequently writes on the topic and not in a fashion generally known as being light on understanding. Yet he compounds this with his dismissal of voluntary programs, under which companies buy voluntarily produced emission “credits”, with:

“There are two snags (with “voluntary” cap-and-trade vs. mandatory), however. Inevitably, some voluntary carbon permits have proved fraudulent. They represent carbon reductions that have not actually happened or reductions that have been marketed as offsets to multiple purchasers. As a result, the voluntary market is periodically attacked, and would-be purchasers shy away. Voluntary purchasers buy carbon offsets to be pure. Impure scams defeat their objective.”

Why cite this flaw with cap-and-trade schemes as if it is a flaw of voluntariness? Indeed, one might as well say that “involuntary purchasers buy carbon offsets to claim emission reductions. Impure scams defeat their objective.” Mr. Mallaby seems unaware that the highlight of cap-and-trade being implemented for two years in Europe with spectacular lack of success is that governments over-allocated emission credits, such that not only did the permits “represent carbon reductions that have not actually happened or reductions that have been marketed as offsets to multiple purchasers,” but the scheme has resulted in no identifiable emission reductions whatsoever despite windfall profits in the billions (that is, energy prices increased by that much which is only siphoned off into well-heeled rent seekers’ pockets).

The lid has been serially blown off of this scam by a sleepy little organ called the Financial Times. Still, Mr. Mallaby implies that phony “reduction” credits are the exclusive province of non-coercive regimes and would not occur if only we would succumb to the siren song of rationing…which he writes today to disparage, not praise.

It certainly seems odd to go to such lengths to falsely distinguish a scheme the avoidance of which is your thesis. Unless you have only a superficial understanding about the issues, of which few accuse Mallaby. Strange, strange.

Perhaps I expect too much from a piece that not only claims that “Companies such as DuPont, American Electric Power and BP have bought peace from environmental critics by offsetting their expansion plans” – that’s certainly news to these companies, which in fact have discovered that appeasement only whets their antagonists’ appetites further – but which also offers the following confusion: “the Kyoto system represents the culmination of a huge global diplomatic effort, and the United States was wrong to turn its back on it”.

Oh. Sure it stinks, but it took a long time and many people were involved, therefore you should agree to it. Ignore that the Clinton-Gore administration disregarded unanimous Article II, Section 2 “advice” when agreeing to this pact (though it wisely eschewed pushing for ratification on the express grounds that there is “involvement” by many countries as was the case here, and then there is many countries being “covered” which of course does not describe Kyoto), and the stunt that Europe pulled in The Hague when they thought the Gore team would cave in the face of an uncertain Florida recount. It took a lot of effort so accept it. (Note: as “global warming” seems certain to be an issue in ’08, bear in mind this distinction in philosophy).

As an aside one wonders whether this argument would persist if, through the Socratic method, Mr. Mallaby and an interlocutor arrived at an understanding that a) the U.S. only walked away from the table once, b) occurring as that did in November 2000 in The Hague, it is impossible to lay that at the feet of Bush who c) merely adopted the Clinton-Gore position of not seeking ratification (if not their rhetoric)?

The bad news is that Mr. Mallaby gets that the Kyoto scheme has failed, even if he’s not quite clear on the details. Hopefully the details will ultimately manage to surmount gut feelings and sentiments so that important platforms like his can be effectively employed to educate the public on our options.



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