It’s been a bad month for cap and trade.
Governor Chris Christie has decided to pull New Jersey out of the Regional Greenhouse Gas Initiative (RGGI), the Northeast’s carbon cap-and-trade program. New Hampshire’s legislature has also voted to leave, though the governor may veto the bill. Other states are considering their positions. As states leave RGGI and its market gets smaller, the advantages of linking up diminish, eroding its economic and political viability. Meanwhile, California’s attempt to implement cap and trade is under attack from the left and, as a result, has hit procedural roadblocks. These events have come as a surprise to many who follow this sort of thing—but are they important? Maybe. Three reactions are possible.
1) Despair (Cap and trade gets a knife in the back to match the one in the front)
RGGI and California’s AB32 are reminders that once, not so long ago, climate change was politically relevant and the best policy for avoiding it—pricing carbon—appeared not only possible but inevitable. RGGI and Europe’s Emissions Trading Scheme (ETS) are the only carbon cap-and-trade programs of any size anywhere in the world. (New Zealand also has a nascent scheme.) RGGI, to date, has survived the political tides that turned cap and trade into “cap and tax” and likely make any new carbon policy impossible in this country. In short, the states would carry the torch until, one day, Washington wakes up. It would be depressing irony, this story goes, if those state programs should die not by outside political force but by suicide.
2) Indifference (“Wait…New Jersey had a carbon policy?”)
Another view is that you can talk all you want about “carrying the torch” without changing the fact that RGGI was and is a mere drop in the bucket. Its goals were always modest, and emissions caps were set so high that allowances never had any real value. If it weren’t for price floors, they would have been worthless. The program didn’t result in enough emissions cuts to be regionally relevant, much less have an effect on the climate problem. RGGI hasn’t had political success either. It’s chosen form—cap and trade—has become much less popular since the program started. If RGGI was supposed to show the country that cap and trade could work and wasn’t so scary after all, it’s either failed or nobody was paying attention in the first place. When and if pricing carbon becomes politically plausible again in Washington, it will be because politics and national public opinion have changed, not because New Jersey lit the way. The programs don’t seem to have had any effect internationally, either—they aren’t touted by U.S. climate negotiators and seem to have had no persuasive power during climate talks.
3) Optimism (Playing the long game)
Michael Levi argues that there may be more positives than negatives in Gov. Christie’s announcement:
…in the course of rejecting RGGI, Christie embraced the reality of the climate problem. Last fall, he said he was skeptical that human-caused climate change was a real problem. In his withdrawal announcement, though, he made it pretty clear that he thought climate change was a serious matter. This is no small thing for a rising star in a party that has increasingly made climate denial a litmus test for its leadership.
Christie’s about-face on this issue makes former Minnesota Governor and GOP presidential hopeful Tim Pawlenty’s recent turn in the opposite direction look like ham-handed pandering.
Just as with every other environmental issue, the U.S. will have a climate policy when the center-right accepts that one is necessary, and not before. RGGI is doing very little to change that. In other words, RGGI matters only if you care more about the tool (cap and trade) more than the problem (climate change). It is odd, though, that a deficit hawk like Christie would spike a revenue generator like RGGI. That does not bode well for those who think that a carbon tax is the key to a grand environmental-fiscal compromise.
Which of these three is right? Perhaps unsurprisingly, all three to some extent. Pricing carbon is the most effective climate policy—so it is troubling to see it lose ground. RGGI itself is largely irrelevant to both the science and politics of climate. And the long view matters most of all. If you want a meaningful federal climate policy, you are looking for one thing: a 60th vote in the Senate. Could that one day be Christie?
