Tuesday, May 19, 2009

There is much reporting today on a bill before Chairman Henry Waxman's House Energy and Commerce Committee to address climate change. From Reuters we learn that
Republicans are expected to try to surgically remove the heart of the proposal -- the establishment of a "cap and trade" system that would gradually reduce the amount of greenhouse gases that utilities, steelmakers, oil refineries and other companies could emit.
While in a New York Times piece, the phrase "cap and trade" does not appear. The emphasis is instead on upto 450 possible amendments to the 946 page bill. The impression is more one of legislative chaos than partisan contention. One item that really stood out:
The GOP also may try to eliminate tax benefits for companies that belong to the U.S. Climate Action Partnership, including Alcoa, BP, Duke Energy Corp., Rio Tinto and Shell Oil Co., and tinker with the nonprofit tax status for the Environmental Defense Fund, Natural Resources Defense Council, Nature Conservancy, World Resources Institute and Pew Center on Global Climate Change.
Come again? The GOP wants a tax increase on some major corporations?
Asked to elaborate on the tax-focused amendments, Rep. John Shimkus (R-Ill.) said, "You'll have to wait and see. You have three days of markup opportunity. When you do something this big this quick, I think there are going to be provisions in this bill that members are going to regret. And we'll give them an opportunity to know about it before they vote for the entire bill."
Apparently only a case of temporary insanity.

At WaPo a board chairman from an energy holding company seeks to discredit the cap and trade idea by linking it to the recent financial markets collapse:
If you liked what credit default swaps did to our economy, you're going to love cap-and-trade. Just read Title VIII of the bill, which lets investment banks, hedge funds and other speculators participate in the cap-and-trade market. They don't have emissions to cut; they have commissions to make.
However his argument that participation of speculators is troublesome because highly regulated utilities can't handle market volatility seems strange. Markets allow risk adverse businesses to hedge against volatility by off-loading that risk onto speculators. Eliminate the speculators and you leave the hedgers with no one to trade with.

More temporary insanity? Perhaps. There seems to be something about mixing energy and climate issues that particularly confuses politicians who, after all, can hardly be expected to be objective while balancing the pressures from various special interest groups, campaign contributors, constituents looking for pork, party hierarchy and media comment.

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