Cap and trade dropped from Senate's energy-climate change bill

Cap and trade, a centerpiece of the Waxman-Markey Bill passed by the House, won't be included in the upcoming Senate version of the bipartisan energy-climate change legislation, according to its sponsors.

Viewed by many as an effective environmental system that uses the market's power to reduce pollution, the program nonetheless was dubbed "cap-and-tax" by conservative groups in the past year and the name stuck.

"The term itself became too polarizing and too paralyzing in the effort to win over conservative Democrats and moderate Republicans to try to do something about climate change and our oil dependency," says Fred Krupp, president of the Environmental Defense Fund, in a March 26 article in The New York Times.

The idea actually began as a Republican plan 20 years ago under the first Bush administration to reduce sulfur dioxide pollution or "acid rain" and was successful at a lower cost than had been estimated.

The Times article, "Cap and Trade Loses Its Standing as Energy Policy of Choice," suggests that Reps Waxman and Markey, while trying to gather a majority to pass the bill, gave out too many concessions and exemptions to utilities, refiners, oil drillers, heavy industries and others. A number of companies, including big utilities and Goldman Sachs, stood to get windfall profits because they would be doled out free allowance coupons.

Initially, President Obama had proposed a 100 percent auction of permits with a large tax rebate going to consumers to cover their higher energy costs, but the simplicity of the concept became lost in House negotiations.

Senators Lindsay Graham (R-S.C), John Kerry (D-Mass) and Joe Liberman (I-Conn) are putting together a different bill that sets puts a cap on greenhouse gas emissions, and is expected to be introduced in April.