Unless you're a die-hard policy wonk (or a die-hard climate change denier) it can be difficult to decide where you stand on climate issues. Sure, you're none too pleased that global warming is a-headin' our way, and you're not exceedingly happy that coal plants continue to pollute the air and dump waste into our drinking water either.
So you're inclined to say that limiting the amount of greenhouse gas emissions all these coal plants, oil rigs, and factories can emit is a good idea. And that you support US energy reform and the climate bill.
But wait. Then, you start reading about how a cap and trade system would simply be a giveaway to polluting companies, and that even green folks shouldn't support the climate bill. This is why groups like Greenpeace and Friends of the Earth retracted their support from the climate bill that passed the House of Reps early in the summer--they felt it was too lenient on big business.
One popular argument you'll hear in dark green circles is that since the climate bill gives most of its 'pollution permits' away initially, the big industries are getting a free pass--or worse. Some claim that since these permits will have a value, the companies will actually make money off the very thing that's supposed to be putting a cost on pollution. This famously happened when the European Union launched their cap and trade initially--utility companies made windfall profits.
But none of this should prevent you from supporting the cap and trade in the US climate bill, and here's why.
Yes, the bill that passed the House of Reps last June is designed to give polluters free permits--but only at first. Every year after the cap and trade begins, polluting companies get less and less of their permits for free. They get phased out--this is designed to give these companies a buffer with which to install more efficient technology, and to start reducing emissions.
And the US utility and coal companies will most certainly not be making profits off this legislation in the long run--that's why they're fighting it tooth and nail with every dirty trick in the book. You see, those free permits aren't given directly to the power generators at all. Grist's Dave Roberts explains:
However, the allowances will be given to local distribution companies (LDCs), not directly to generators, with the stipulation that state utility regulators see to it that the allowance value makes its way to households. The idea is to protect consumers while accounting for regional differences in energy prices and carbon intensity (oh, and shield utilities from the political backlash of rate hikes).
So they don't get to pocket any of that sweet permit cash--it goes towards protecting energy consumers from raised rates instead.
Yes, it would be ideal if polluting companies had to pay for all their permits from the get-go, and the money was invested in green technology--that was what most greens were pulling for before the whole political reality thing set in. But we have to bear in mind that this thing's not going to be perfect, and that compromises are necessary to even get it off the ground. After a couple of years, we'll see the cap take effect, and it'll start hurting polluting companies who continue to pollute. Trust me, the coal companies are way more pissed off about cap and trade than any environmentalist.