July 15, 2008

Kilowatt-hour tax is fairest approach

The climate change debate has been dramatized in movies, on Hollywood’s red carpets, and in documentaries featuring melting ice caps. The collective effect is extraordinary, and positive. America now stands ready to address one of its toughest challenges since the industrial revolution—decarbonizing our energy supply and economy. Now the hard work begins.

 

I strongly support federal legislation to create a mandatory and declining national cap on carbon dioxide (CO₂) and other greenhouse gases, with a target to reduce these emissions by 60% to 80% by 2050. I also applaud Sens. Joseph Lieberman (I-Conn.), John Warner (R-Va.), and many of their colleagues for their dedication to advancing climate legislation in Congress. We need both substantial and immediate investment in the research, development, and deployment of technology—and straightforward regulation to address this major ecological problem.

The Lieberman-Warner climate bill correctly takes an economy-wide approach by capping CO₂ and other greenhouse gas emissions. Unfortunately, the approach used to meet that cap requires companies to pay for current CO₂ emissions using auctions. This is misguided in two ways:

• First, it undermines the primary objectives of a cap-and-trade system, which are to put a declining cap on emissions, set a price for CO₂, and provide a transition mechanism for those adversely impacted by the cap. It significantly erodes the ability to provide a smooth transition for consumers who depend on electricity with a large carbon footprint.
• Second, it proposes to raise funds for a variety of purposes unrelated to developing technology solutions. Some politicians have even called for using the funds for a middle-class tax reduction. Without new technologies, we have no hope of achieving our carbon-reduction targets. The funding of technology should be pursued independent of CO₂ regulation under a cap-and-trade system.

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