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Too Many Lobbyist Hands in the Cap and Trade Cookie Jar

Posted By Nicolas Loris On May 20, 2009 @ 2:40 pm In Energy | Comments Disabled

Warning from Dr. Enno Harders, a lead official from German Emissions Trading Authority, who experienced troubled initiating a German cap and trade system [1]:

Early cap and trade [proposals] receive enormous lobby.”

Businesses rightfully have an interest in ensuring that they protect their bottom lines. Many of them have calculated that some sort of carbon capping is inevitable and that their interests will therefore be best served by trying to influence how such a cap is implemented. And the best way to do that will be to position themselves as supporters of the legislation and then to provide some helpful suggestions on how to “improve it.” Representatives from oil, coal, gas, wind, solar, energy-intensive producers and just about every company imaginable all have stake in the game one way or another.

“Corporate support of cap-and-trade is largely responsible for the American Clean Energy and Security Act of 2009,” argues [2]Tom Borelli, Ph.D, director of the Free Enterprise Project at the National Center for Public Policy Research.  Borelli asserts that most of the corporations haven’t done their homework since capping carbon acts as a massive energy tax, primarily on fossil fuels. With cap and trade, absolute limits on total emissions of greenhouse gases are established. Before those in a covered sector can emit a greenhouse gas, they need to have the ration coupons (also known as pollution permits or allowances) for each ton emitted. Because the ration coupons will have a value, and therefore a cost, cap and trade becomes a tax on fossil fuels and the energy they generate.

The problem is, a number of these corporations have done their homework and are now waiting in line for a government handout, also knowing very well they can simply pass increased costs to the consumer.

Special interest politics have always been a part of politics and it’s unlikely to stop any time soon. Milton Friedman’s son explains it nicely [3]:

“Special interest politics is a simple game. A hundred people sit in a circle, each with his pocket full of pennies. A politician walks around the outside of the circle, taking a penny from each person. No one minds; who cares about a penny? When he has gotten all the way around the circle, the politician throws fifty cents down in front of one person, who is overjoyed at the unexpected windfall. The process is repeated, ending with a different person. After a hundred rounds everyone is a hundred cents poorer, fifty cents richer, and happy.”

In this case, the ‘pennies’ are taken from the American taxpayer, and in return they are hit with higher energy prices, job losses, income cuts [4], and a sharp left turn toward big government.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/05/20/too-many-lobbyist-hands-in-the-cap-and-trade-cookie-jar/

URLs in this post:

[1] system: http://www.reuters.com/article/mnCarbonEmissions/idUS211934591220090520

[2] argues : http://www.nationalcenter.org/PR-Waxman_Markey_052009.html

[3] nicely: http://www.amazon.com/Machinery-Freedom-Guide-Radical-Capitalism/dp/0812690699

[4] higher energy prices, job losses, income cuts: http://www.heritage.org/Research/EnergyandEnvironment/wm2450.cfm

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