The more serious objection to Waxman-Markey is that it sets up a system under which many polluters wouldn’t have to pay for the right to emit greenhouse gases — they’d get their permits free. In particular, in the first years of the program’s operation more than a third of the allocation of emission permits would be handed over at no charge to the power industry.
Now, these handouts wouldn’t undermine the policy’s effectiveness. Even when polluters get free permits, they still have an incentive to reduce their emissions, so that they can sell their excess permits to someone else. That’s not just theory: allowances for sulfur dioxide emissions are allocated to electric utilities free of charge, yet the cap-and-trade system for SO2 has been highly successful at controlling acid rain.
But handing out emission permits does, in effect, transfer wealth from taxpayers to industry. So if you had your heart set on a clean program, without major political payoffs, Waxman-Markey is a disappointment.
I'm shocked. We haven't hit Peak KY yet, then?
Nobody could have predicted....
UPDATE I'm reminded, as so often these days, of the dystopian futures of Richard Morgan. From a post on Market Forces, back in 2006:
But Notley wasn't listening. He was lit up by the whisky and something else that Chris couldn't get a fix on. Something that looked like desperation but wore an industrial-wattage grin:
'Do you really think we can let the developing world develop?
You think we could have survived the rise of a modern, articulated Chinese superpower twenty years ago? You think we could manage an Africa full of countries run by intelligent, uncorrupted democrats? ... Just imagine it for a moment. Whole populations getting educated, and healthy, and secure, and aspirational. Women's rights, for Christ's sake. We can't afford these things to happen, Chris. Who's going to soak up our subsidised food surplus for us? Who's going to make our shoes and shirts? Who's going to supply us with cheap labor and cheap raw materials? Who's going to store our nuclear waste, balance out out CO2 misdemeanors? Who's going to buy our arms?'
He gestured angrily.
'An educated middle class doesn't want to spend eleven hours a day bent over a stitching machine. They aren't going to work the seaweed farms and the paddy fields 'til their feet rot. They aren't going to live next door to a fuel-rod dump and shut up about it. They're going to want prosperity, Chris. Just like they've seen it on TV for the last hundred years. City lives and domestic appliances and electronic game platforms for their kids. And cars. And holidays, and places to go to spend their holidays. And planes to get them there. That's development, Chris. Ring any bells? Remember when we told our people they couldn't have their cars any more? When we told them they couldn't fly. Why do you think anybody else is going to react any differently out there?