Cap and Trade: The Maxman-Markey Pay to Play

The Heritage Foundation, Wednesday, May 20, 2009

When Congress passed its last major energy legislation in 2005, a minor provision was added late in the legislative process that created a $1-per-gallon tax credit for “renewable diesel” fuel created through “thermal depolymerization.” The measure was included to benefit a single firm that produced boiler fuel from turkey waste, but in 2007 the Internal Revenue Service ruled that the tax credit also applied to other livestock waste. This led corporate giants ConocoPhillips and Tyson Foods to form a joint venture that turned chicken, cow, and pig fat into diesel fuel.
But just as ethanol mandates drove up the price of food, diverting Tyson’s animal fat into the energy market drove up the costs of manufacturing soap. So the soap lobby fought back and earlier this year Congress cut the thermal depolymerization tax credit in half. This made the Conoco/Tyson venture unprofitable, which they have since discontinued.

What does this have to do with the Waxman-Markey cap and trade legislation currently being debated in Congress? Everything. In order to win enough votes to pass cap and trade, Rep. Henry Waxman (D-CA) has given the corporate members of the United States Climate Action Partnership (which includes both private and government-controlled firms like General Electric, Duke energy, Chrysler, and General Motors) a front-row seat in writing the legislation. The motives of these major corporations are simple: if they cooperate with big government in drafting the legislation, they can cut deals to protect their bottom line. If they don’t play ball, then big government will just tilt the regulatory scheme in their competitors favor.

As the New York Times reports, this is exactly what is happening in the House now:

Cap and trade, by contrast, is almost perfectly designed for the buying and
selling of political support through the granting of valuable emissions permits
to favor specific industries and even specific Congressional districts. That is
precisely what is taking place now in the House Energy and Commerce Committee,
which has used such concessions to patch together a Democratic majority to pass
a far-reaching bill to regulate carbon emissions through a cap-and-trade
plan.

The Center for Public Integrity released a study today showing that lobbying on the Waxman-Markey bill has been dominated by just 10 major lobbying firms. And yesterday the United States Climate Action Partnership released a statement in support of Waxman-Markey explaining:

As USCAP has indicated, there are several key linked issues that must fit
together to ensure a climate protection program is environmentally effective,
economically sustainable and fair. In some instances, that does not occur in
this legislation. … Individual USCAP members will continue to work with Congress
to address these matters in a satisfactory manner.

Oh, we’re sure they will.

Comment: Unless all credits are sold, cap and trade is an ineffective sham and is nothing but a bazaar for buying and selling of political favors where congress picks winners and losers. I think we need to address global warming, but the proposed cap and trade bill will not achieve its objectives and will institutionalize the worse of government corruption.

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