The Domenici-Bingaman White Paper and scheduled "conference" appears to raise a number of important questions to stimulate discussion leading to the development of legislation, but it is clear that the objective is not a search for the right path; it is a justification for a regulatory program based on a mandatory "cap and trade" system.
"The White Paper's approach is unfortunate because it prescribes a policy outcome in advance of analysis and discussion of either the justification or the consequences of that outcome," Institute CEO William O'Keefe observed. "The process appears designed to build support for a preconceived conclusion instead of exploring what last year's energy bill will achieve and what in addition might be justified."
The event is driven by misguided assumptions about the current state of knowledge about climate change. While no one seriously questions human activity being the primary cause of greenhouse gas accumulation in the atmosphere, the assumption that human activity is the sole or even major cause for temperature increases in recent decades or the past century is simply not correct. Consequently, to assume that government actions to restrict those emissions through a complex energy rationing scheme will have an appreciable impact on temperature fluctuations is simply not supportable.
"Convening a meeting of economic rent- seekers only demonstrates that some companies will exploit any opportunity to reduce competition and gain profits through regulation instead of from being successful in the market place," O'Keefe continued. "The federal government has a poor record in trying to control energy markets through politically appealing but flawed legislation and regulations."
"The cap and trade system being advocated is nothing more than a Trojan Horse hiding an energy tax," O'Keefe concluded. "Leading economists have concluded that a carbon tax would be far more efficient in constraining emissions than a cap and trade system, perhaps 5 times as efficient. But, politicians are loathe to propose tax increases."
Promoting innovation and technological development and deployment around the globe is a more effective and efficient policy choice for confronting climate change. The U.S. is already leading the world on that path and in promoting the deployment of technology in developing countries which are rapidly becoming the leading source of emissions.
"Title XVI covering Climate Change of the Energy Policy Act of 2005, the Administration's Climate Change Technology Program, the 2005 G-8 communiqué, and the participants in the Asia Pacific Partnership all agree that significant technology advances will be needed to adequately and affordably address climate change over the next century," Institute fellow Dr. Eric Loewen stated. "This is common ground and should be exploited."
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