Despite rumours to the contrary, John McCain has not dropped carbon cap-and-trade as a fiscal mechanism to fight climate change. The apparent source of the rumours is the fact that cap-and-trade not mentioned in his Jobs for America briefing paper. However, it does figure prominently on the first page of his website’s Plan on Global Climate Change. Why the apparent disconnect? McCain is trying to appeal to the advocates of climate change policy and those of economic growth. These tend to occupy opposing political camps, all of whose support he needs in November.
Cap-and-trade represents the most politically sellable compromise between the two camps. Fiscal conservatives who would froth at the mention of a carbon tax only scoff at cap-and-trade. Corporation-hating environmentalists soften when a candidate proposes cap-and-trade bercause at least it acknowledges that emissions should come at a price.
What about policy wonks like me? As I have always said, a cap-and-trade system can accomplish any goal, whether that goal is political victory or emission reductions. Its effectiveness in achieving the political goal depends on the candidate’s communication skills. And in achieving the emission-reduction goal, cap-and-trade’s effectiveness depends on the toughness of the cap.
The European Emission Trading Scheme (ETS) is an example of its value as a political tool. Everyone, including the average European voter, thinks the Europeans are ahead of the game on climate change. Recent emissions estimates from the European Commission contradict this perception.
The big question is, will the gambit work in the U.S.? Much depends on McCain’s campaign.