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Forest and Carbon Eclipping

Carbon

+1 1 vote
Sojitz to set up online carbon credits market - Nikkei
by Reuters News on 29 March 2010, 20:59 PM 0 comments , 54 views
Categories: Reuters News
March 30 (Reuters) - Trading house Sojitz Corp <2768.T> will create an online marketplace for carbon credits to quickly match up buyers and sellers, the Nikkei business daily reported.
Various frameworks exist in Japan for trading carbon credits, but with no common marketplace, buyers and sellers often have difficulty finding each other and getting a handle on market prices, causing the domestic market to stagnate, the paper said.
Sojitz subsidiary CoalinQ Corp, which operates an e-commerce site for coal transactions, will set up a joint venture with carbon credit seller Smart Energy Co on Thursday and the firm will start operating a carbon trading site in May, the daily said.
The marketplace will handle five or so kinds of carbon credits, including those issued by the Ministry of Economy, Trade and Industry, the Environment Ministry and the Tokyo Metropolitan Government, the Nikkei said.
About 4 percent to 5 percent of transaction prices will be charged as commissions and trading of the equivalent of at least 800,000 tons of carbon dioxide (CO2) emissions a year is targeted by 2014, the paper said.
Demand for carbon credit trading is expected to increase as a Tokyo ordinance on limiting CO2 emissions takes effect next month, the daily said.
(Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Gopakumar Warrier) ((saqib.ahmed@thomsonreuters.com; within US +1 646 223 8780; outside U.S +91 80 4135 5800; Reuters Messaging saqib.ahmed.reuters.com@reuters.net))
Keywords: SOJITZ/
Carbon

+2 2 votes
Deutsche Bank, BarCap see over 10% drop in 2009 EU ETS emissions
by Reuters News on 29 March 2010, 09:50 AM 2 comments , 156 views
Categories: Reuters News

* Deutsche sees 10.4 pct drop in '09 EU ETS emissions
* BarCap forecasts 10.5 pct drop, little effect on prices
* Both see between 3-5 pct rise in 2010
LONDON, March 29 (Reuters) - Carbon emissions under the European Union's Emissions Trading Scheme fell by over 10 percent in 2009 but are expected to rebound this year as Europe's economy recovers, Deutsche Bank and Barclays Capital said on Monday.
Deutsche bank said in an analyst note that carbon emissions from heavy industry fell to 1.9 billion tonnes last year, down 220 million tonnes from the 2.12 billion tonnes emitted in 2008, the first year of the scheme's second phase.
"We expect 2009 to mark the low point of emissions over Phase 2, and project a 5 percent rebound over 2010 to just over 2 billion tonnes," said Deutsche Bank analyst Mark C. Lewis.
"We expect a more modest upward trend of 2 percent in both 2011 and 2012, but would note that the severity of the recession in 2009 can be gauged by the fact that even by 2012 our projected levels (2.095 billion) are still below that of 2008."
BarCap also published their forecasts on Monday.
"Total emissions from covered installations will be 1.897 billion tonnes, which is a 10.5 percent year/year reduction," said BarCap's Trevor Sikorski.
Sikorski then expects 2010 emissions to climb back to 1.95 billion tonnes, a 2.8 percent rise.
The European Commission is scheduled to publish preliminary 2009 emissions data for the scheme on April 1, though both analysts said the data will likely be incomplete.
Sikorski said the data's impact on EU emissions permit prices is likely to be muted.
"The market is expecting 2009 emissions to be down by double figures, somewhere between 10-12 percent, so anything around these numbers should introduce little short-term impact," he said in a note.
"The market should react in a bearish manner only if verified emissions are above this range."
EU permits for December delivery were down 0.5 percent at 12.85 euros a tonne on Monday afternoon.
Deutsche Bank's Lewis expects CO2 from the EU's power sector, the 27-nation bloc's largest emitters, to have dropped by 110 million tonnes or 7.3 percent to 1.4 billion tonnes of CO2 last year.
"This reflects both a fall in the total amount of electricity generated (which we estimate at nearly 5 percent), and a cleaner fuel mix across the EU," he said.
Lewis also estimated industrial emissions, which include those from the steel and cement sectors, to also have fallen by 110 million tonnes, or 18 percent, to 500 million tonnes of CO2.
Last month, analysts Point Carbon estimated 2009 EU ETS emissions fell by 11 percent to 1.886 billion tonnes.
(Reporting by Michael Szabo; Editing by William Hardy)
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by Umashankar S - Bangalore, India on 29 March 2010, 13:07 PM
Going by the trends, emissions could be circa 1.85 billion tonnes in 2009. The cap for phase-2 is at 2.090 billion tonnes per year. Time to strengthen the ETS.
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GHG emissions reduction: Switching off climate change


Alan Oxley , Melbourne, Australia | Mon, 03/29/2010 10:02 AM | Opinion
President Susilo Bambang Yudhoyono has committed Indonesia to make substantial cuts in emissions of greenhouse gases. Several studies have been commissioned which recommend this.
Others aim to set out what to do. All, in one way or another, rely on the official United Nations report on assessments of climate change.
But there are now serious doubts about the scientific soundness of those assessments.
In what has been dubbed “Climategate”, it was revealed that leading climate change scientists have manipulated data in the official reports of the Intergovernmental Panel on Climate Change (IPCC) — the UN’s official adviser on climate science. The IPCC has been publicly embarrassed and has ordered a review of its processes.
Six months ago most political leaders felt bound to take action to reduce emissions. The politics have suddenly changed.
Recent opinion polls in the US and Britain show people are becoming less convinced of the need for drastic action on climate change. There is now new political sensitivity to the high cost of cutting greenhouse emissions.
This is a time when prudent people would take extra care about claims about the impact of global warming. The World Wide Fund for Nature (WWF) apparently sees things differently.
This week it is urging that everyone in Jakarta turn their lights off for an hour on Earth Day (March 27) to “change the world in one hour”. This is a global campaign.
According to WWF, 300 megawatts/hour less power will be consumed, saving 267 trees and creating cleaner air for 535 people.
Let’s assess these numbers at face value. With trillions of trees and 220 million people in Indonesia, these changes are so tiny that a statistician would rate them at zero. How can this “change the world”?
But there’s something else. It is the nation’s electricity utility, not the consumers of electricity, which emit greenhouse gases.
The generators will not be powered down during Earth Hour. Because a power grid cannot predict how much consumption will vary in that hour, it is most likely to keep its generators operating during Earth Hour even if they do not need to produce electricity. Only in this way can it is able to meet demand from hour to hour.
So it is hard not to form an opinion that WWF is less interested in the technical or scientific accuracy of what it says, than to create a fanfare. We should not be surprised at this. WWF’s approach to forestry in Indonesia for over a decade leads one to the same view.
In 1997, one year before WWF established a permanent presence in Indonesia, Danish environmentalist Bjorn Lomborg showed that claims by the president of WWF International that the forest fires that year in Indonesia were the worst on record were simply not true.
He also showed WWF’s assessment of how much forest was burnt was significantly in error.
This fanfare appeared to presage the launch of WWF’s long-running campaign to halt expansion of forestry and plantation industries in Indonesia.
Little has changed. Today, WWF uses data on forest fires from that earlier period to show rates and causes of deforestation in Indonesia that do not stand scrutiny.
Analyses produced two years ago to demonstrate a large carbon footprint in Jambi province from the forest sector relied on hearsay and arbitrarily discounted the sequestration of carbon by natural forests, rather using sound technical analysis.
The forest industry protested these claims, pointing out, as the Food and Agricultural Organization has for years, that the biggest drivers of illegal logging and deforestation in Indonesia were independent operators and poor smallholders. WWF continued to solicit funds from its donors and aid agencies. Environmental campaigners typically dismiss counter comment from the forest industry as “just what you would expect to hear”.
The recent Climategate revelations support the perception that WWF is also guided more by fanfare than fact on climate change.
The London Telegraph found no less than 16 WWF reports made claims which were used as sources for the UN reports which did not meet the scientific standards of the UN body.
The most notorious was reliance on a claim in a WWF report, for which there was no dependable scientific support, to demonstrate that climate change was accelerating the shrinkage of glaciers in the
Himalayas.
The issue here is not a quibble over numbers. WWF’s research is highly influential. It contributed to the widely publicized claim, since disavowed by the Indonesian government, that Indonesia is the third largest emitter of greenhouse gases. Research by World Growth has confirmed that Indonesia’s response is correct.
Despite this, the claim is still used, even by the British Government, to justify expensive and growth-sapping measures to reduce emissions.
WWF reports are also used to support bids for funding from aid donors and foundations to support its programs.
Generally donors prefer to support on-ground conservation rather than advocacy. What has WWF delivered in Indonesia apart from anti-forestry tirades?
It has a number of small, but useful, animal conservation programs. Its conservation showpiece is Tesso Nilo National Park’s expansion to 100,000 hectares in Sumatra.
This has not been successful. Forest land encroachment for livelihood plantings and illegal logging by local communities are rampant within the park.
Despite this, has continued to incorrectly label large plantation and forestry companies as the primary threat to the park. Rather than get its own house in order and fix Tesso Nilo’s existing problems, WWF has been lobbying national and local governments to have the park expanded.
The question here is, if poor communities within the existing national park boundaries cannot be managed currently, how will an even larger park fare?
While WWF professes that real conservation is its primary business, its activities indicate that what drives the organization is what it calls advocacy (i.e. creating fanfare). Some donors, like the European Union (EU), directly support the goal of constraining forestry and support WWF advocacy for that.
Like WWF, the EU gives no public recognition of the fact that around 25 percent of Indonesian forest and over 50 percent of Malaysian forest is already reserved, or that forest conversion on land earmarked for development creates jobs and reduces poverty.
Those motivated to see real conservation results however might be more circumspect. Climategate reveals that WWF’s reputation as a conservation organization is at risk. It needs to show it has done something to improve the standard, quality and veracity of its technical work.
Meanwhile, its Earth Hour website suggests it is business as usual. It sports an electronic invitation to make a financial contribution to the WWF campaign.

Recent opinion polls in the US and Britain show people are becoming less convinced of the need for drastic action on climate change.

The writer is chairman of World Growth, a US-based NGO



Community networks key to forest reform
Adianto P. Simamora , The Jakarta Post , Jakarta | Wed, 03/24/2010 6:01 PM | National
Communities linked to their own networks and organizations have the best chance of success in community forestry, a research finds.

The three-year research project, conducted by the Center for International Forestry Research (CIFOR), assessed 30 sites in 10 countries across Africa, Asia and Latin America.

“The research focused on communities that had fought for or been granted new statutory rights,” Anne Larson, senior associate at CIFOR said.

The findings were published in a book, Forest for People: Community Rights Forest Tenure Reform, which was launched on Wednesday.

“We aimed at identifying issues and concerns from the perspective of socially and economically vulnerable groups that were seeking tenure reforms,” she said.

Tenure reforms – a change in tenure rights in forested areas – represent a forest reform comparable to widespread agrarian reforms of the mid 20th century.

Although the world’s forests are still primarily public land, more than a quarter of forests in developing countries are now owned by or assigned to communities.

It said that tenure was particularly important in light of the ongoing negotiations on REDD (reducing emissions from deforestation and forest degradation).

For REDD schemes to be successful, clear ownership of forest resources and carbon pools needs to be established so that payments for carbon sequestration can be made. Without having secure rights and clear ownership over carbon pools, communities and indigenous groups may not be able to claim benefits from REDD schemes, and may even be dispossessed.

This would be to the detriment of efforts both to mitigate climate change and to ensure equity, Anne said.


UK supports Jambi’s conservation efforts
John Afrizal , The Jakarta Post , Jambi | Mon, 03/29/2010 10:14 AM | The Archipelago
Indonesia and the UK are working together to curb the impact of global warming and deforestation, says British Ambassador to Indonesia Martin A. Hatfull.
During a visit to Jambi’s Berbak National Park in East Tanjung Jabing regency, he said his government expected to hold an open dialogue with the Indonesian government.
He acknowledged President Susilo Bambang Yudhoyono had often expressed his commitment to addressing climate change and protecting Indonesia’s forests.
“We also plan to work together with governments in the provinces, where we can help develop programs that are environmentally responsible,” said Hatfull.
He was in Jambi to observe efforts to curb deforestation and reduce greenhouse gas emissions, crucial in the fight against climate change.
He said he was pleased with the visit, and the programs being run by the Geological Society of London, which works together with the park to curb deforestation and protest the forest.
“The British government, through the Darwin Initiative, is funding the project,” said Hatfull.
Jambi Governor Zulkifli Nurdin, said that Jambi was one of the country’s cultural centers and the only remaining home of two important tribes in Sumatra — the Rimba and Talang Mama.
He said that Jambi was also the only province in Indonesia that had four national parks — Kerinci Seblat, Bukit Duabelas, Tigapuluh and Berbak national parks — in which various species of flora and fauna are found.
The British government, through its international development ministry, has allocated £4.7 million through the Indonesian Climate Change Fund and from now until 2015 will provide £50 million for climate change mitigation activities across the country.
Hatfull praised Zulkifli for his commitment to addressing climate change, forest fires and illegal logging, as well as his decision to allocate 100 hectares of forest for a restoration project.
“We must manage the forest and environment wisely, not based on greed,” said Hatfull.
`Mosaic system' proposed for plantations
Adianto P. Simamora , THE JAKARTA POST , JAKARTA | Sat, 03/27/2010 12:40 PM | National
Forestry Minister Zulkifli Hasan has asked oil palm plantation companies to adopt mosaic systems to help maintain biodiversity in plantations, and to address mounting criticism of the industry over environmental concerns.
Minister Zulkilfli sent a letter to Agriculture Minister Suswono in February asking for the development of the mosaic system, requiring companies to maintain areas of original vegetation of high conservation value.
Forestry Ministry forest production director general Hadi Daryanto said the ideal percentage of plantation on plots of land was around 70 percent.
"The remaining area should be set aside for, among others, the protection of biodiversity. We want both *the forestry and agriculture* ministers to have one voice in respond-ing to protests on environmental issues from the international community," he told The Jakarta Post on Friday.
Zulkilfli said the mosaic pattern system, which had been adopted in industrial forest plantations, could also minimize diseases that thrive in monoculture plantations.
Minister Suswono was slated to visit European countries to campaign for Indonesia's palm oil products.
Greenomics Indonesia executive director Elfian Effendi said the ministry needed to resolve legal issues surrounding palm plantations before making overseas trips.
"We are worried that the whitewash campaign won't be productive, because up to 3.5 million hectares of oil palm plantations are classified by the Forestry Ministry as illegal plantations," he said.
"Many existing palm oil companies have no licenses to clear land for their plantations."
Activists said the poor supervision of oil palm plantations in Indonesia had led to an increase of greenhouse gas emissions.
However, the Agriculture Ministry, managing the sector, insists that the palm oil industry is not related to deforestation.
It says oil palms account for seven million hectares or 6 percent of Indonesia's total forest area.
Minister Suswono also said oil palm plantations utilized critical or marginal land.
Palm Oil Producer Association (Gapki) executive director Fadhil Hasan has claimed most of 7.3 million hectares of land occupied by palm oil plantations was in conversion forest areas allocated by the government.
The association has accused foreign anti-palm-oil groups of launching campaigns against Indonesia's CPO industry, citing green issues.
‘Mosaic system’ proposed for plantations
Adianto P. Simamora , The Jakarta Post , Jakarta | Fri, 03/26/2010 9:27 PM | National
Forestry Minister Zulkifli Hasan has asked oil palm plantation companies to adopt mosaic systems to help maintain biodiversity in plantations, and to address mounting criticism of the industry over environmental concerns.

Minister Zulkilfli sent a letter to Agriculture Minister Suswono in February asking for the development of the mosaic system, requiring companies to maintain areas of original vegetation of high conservation value.

Forestry Ministry Forest Production Director General Hadi Daryanto said the ideal percentage of plantation on plots of land was around 70 percent.

“The remaining area should be set aside for, among others, the protection of biodiversity. We want both [the forestry and agriculture] ministers to have one voice in responding to protests on environmental issues from the international community,” he told The Jakarta Post on Friday.

Zulkilfli said the mosaic pattern system, which had been adopted in industrial forest plantations, could also minimize diseases that thrive in monoculture plantations.
Carbon

+3 3 votes
BLOG: Who Killed Cap-and-Trade?
by Tyler Gumpright on 29 March 2010, 17:42 PM 0 comments , 56 views
Categories: News from the Web, Blogs, Analysis
March 28th, 2010
By Robert Stavins
In a recent article in the New York Times, John Broder asks “Why did cap-and-trade die?” and responds that “it was done in by the weak economy, the Wall Street meltdown, determined industry opposition and its own complexity.” Mr. Broder’s analysis is concise and insightful, and I recommend it to readers. But I think there’s one factor that is more important than all those mentioned above in causing cap-and-trade to have changed from politically correct to politically anathema in just nine months. Before turning to that, however, I would like to question the premise of my own essay.
Is Cap-and-Trade Really Dead?
Although cap-and-trade has fallen dramatically in political favor in Washington as the U.S. answer to climate change, this approach to reducing carbon dioxide (CO2) emissions is by no means “dead.”
The evolving Kerry-Graham-Lieberman legislation has a cap-and-trade system at its heart for the electricity-generation sector, with other sectors to be phased in later (and it employs another market-based approach, a series of fuel taxes for the transportation sector linked to the market price for allowances). Of course, due to the evolving political climate, the three Senators will probably not call their system “cap-and-trade,” but will give it some other creative label.
The competitor proposal from Senators Cantwell and Collins — the CLEAR Act — has been labeled by those Senators as a “cap-and-dividend” approach, but it is nothing more nor less than a cap-and-trade system with a particular allocation mechanism (100% auction) and a particular use of revenues (75% directly rebated to households) — and, it should be mentioned, some unfortunate and unnecessary restrictions on allowance trading.
And we should not forget that cap-and-trade continues to emerge as the preferred policy instrument to address climate change emissions throughout the industrialized world — in Europe, Australia, New Zealand, and Japan (as I wrote about in a recent post).
But back to the main story — the dramatic change in the political reception given in Washington to this cost-effective approach to environmental protection.
A Rapid Descent From Politically Correct to Politically Anathema
Among factors causing this change were: the economic recession; the financial crisis (linked, in part, with real and perceived abuses in financial markets) which thereby caused great suspicion about markets in general and in particular about trading in intangible assets such as emission allowances; and the complex nature of the Waxman-Markey legislation (which is mainly not about cap-and-trade, but various regulatory approaches).
But the most important factor — by far — which led to the change from politically correct to politically anathema was the simple fact that cap-and-trade was the approach that was receiving the most serious consideration, indeed the approach that had been passed by one of the houses of Congress. This brought not only great scrutiny of the approach, but — more important — it meant that all of the hostility to action on climate change, mainly but not exclusively from Republicans and coal-state Democrats, was targeted at the policy du jour — cap-and-trade.
The same fate would have befallen any front-running climate policy.
Does anyone really believe that if a carbon tax had been the major policy being considered in the House and Senate that it would have received a more favorable rating from climate-action skeptics on the right? If there’s any doubt about that, take note that Republicans in the Congress were unified and successful in demonizing cap-and-trade as “cap-and-tax.”
Likewise, if a multi-faceted regulatory approach (that would have been vastly more costly for what would be achieved) had been the policy under consideration, would it have garnered greater political support? Of course not. If there is doubt about that, just observe the solid Republican Congressional hostility (and some announced Democratic opposition) to the CO2 regulatory pathway that EPA has announced under its endangerment finding in response to the U.S. Supreme Court decision in Massachusetts vs. EPA.
(There’s a minor caveat, namely, that environmental policy approaches that hide their costs frequently are politically favored over policies that make their costs visible, even if the former policy is actually more costly. A prime example is the broad political support for Corporate Average Fuel Economy (CAFE) standards, relative to the more effective and less costly option of gasoline taxes. Of course, cap-and-trade can be said to obscure its costs relative to a carbon tax, but that hardly made much difference once opponents succeeded in labeling it “cap-and-tax.”)
In general, any climate policy approach — if it was meaningful in its objectives and had any chance of being enacted — would have become the prime target of political skepticism and scorn. This has been the fate of cap-and-trade over the past nine months.
Why is Political Support for Climate Policy Action So Low in the United States?
If much of the political hostility directed at cap-and-trade proposals in Washington has largely been due to hostility towards climate policy in general, this raises a further question, namely, why has there been so little political support in Washington for climate policy in general. Several reasons can be identified.
For one thing, U.S. public support on this issue has decreased significantly, as has been validated by a number of reliable polls, including from the Gallup Organization. Indeed, in January of this year, a Pew Research Center poll found that “dealing with global warming” was ranked 21st among 21 possible priorities for the President and Congress. This drop in public support is itself at least partly due to the state of the national economy, as public enthusiasm about environmental action has — for many decades — been found to be inversely correlated with various measures of national economic well-being.
Although the lagging economy (and consequent unemployment) is likely the major factor explaining the fall in public support for climate policy action, other contributing factors have been the so-called Climategate episode of leaked e-mails from the University of East Anglia and the damaged credibility of the Intergovernmental Panel on Climate Change (IPCC) due to several errors in recent reports.
Furthermore, the nature of the climate change problem itself helps to explain the relative apathy among the U.S. public. Nearly all of our major environmental laws have been passed in the wake of highly-publicized environmental events or “disasters,” ranging from Love Canal to the Cuyahoga River.
But the day after Cleveland’s Cuyahoga River caught on fire in 1969, no article in The Cleveland Plain Dealer commented that “the cause was uncertain, because rivers periodically catch on fire from natural causes.” On the contrary, it was immediately apparent that the cause was waste dumped into the river by adjacent industries. A direct consequence of the “disaster” was, of course, the Clean Water Act of 1972.
But climate change is distinctly different. Unlike the environmental threats addressed successfully in past legislation, climate change is essentially unobservable. You and I observe the weather, not the climate. Until there is an obvious and sudden event — such as a loss of part of the Antarctic ice sheet leading to a disastrous sea-level rise — it’s unlikely that public opinion in the United States will provide the bottom-up demand for action that has inspired previous Congressional action on the environment over the past forty years.
Finally, it should be acknowledged that the fiercely partisan political climate in Washington has completed the gradual erosion of the bi-partisan coalitions that had enacted key environmental laws over four decades. Add to this the commitment by the opposition party to deny the President any (more) political victories in this year of mid-term Congressional elections, and the possibility of progressive climate policy action appears unlikely in the short term.
An Open-Ended Question
There are probably other factors that help explain the fall in public and political support for climate policy action, as well as the changed politics of cap-and-trade. I suspect that readers will tell me about these.
Robert N. Stavins is the Albert Pratt Professor of Business and Government, Director of the Harvard Environmental Economics Program, and Chairman of the Environment and Natural Resources Faculty Group.

‘Cap and Trade’ Loses Its Standing as Energy Policy of Choice
By JOHN M. BRODER
Published: March 25, 2010
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WASHINGTON — Less than a year ago, cap and trade was the policy of choice for tackling climate change.

Matthew Cavanaugh/European Pressphoto Agency
Senators Lindsey Graham, left, John Kerry and Joseph I. Lieberman are working on bipartisan climate change legislation.
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• Times Topic: Cap and Trade
Environmental groups and their foes in industry joined hands to embrace the approach, a market-driven system that sets a ceiling on global warming pollution while allowing companies to trade permits to meet it. President Obama praised it by name in his first budget, and the authors of the House climate and energy bill passed last June largely built their measure around it.
Today, the concept is in wide disrepute, with opponents effectively branding it “cap and tax,” and Tea Party followers using it as a symbol of much of what they say is wrong with Washington.
Mr. Obama dropped all mention of cap and trade from his current budget. And the sponsors of a Senate climate bill likely to be introduced in April, now that Congress is moving past health care, dare not speak its name.
“I don’t know what ‘cap and trade’ means,” Senator John F. Kerry, Democrat of Massachusetts, said last fall in introducing his original climate change plan.
Mr. Kerry’s partner in promoting global warming legislation, Senator Lindsey Graham, Republican of South Carolina, pronounced economywide cap and trade dead last month and has since been working with Mr. Kerry to try to patch together a bill that satisfies the diverse economic, regional and ideological interests of the Senate.
That plan, still being written, will include a cap on greenhouse gas emissions only for utilities, at least at first, with other industries phased in perhaps years later. It is also said to include a modest tax on gasoline, diesel fuel and aviation fuel, accompanied by new incentives for oil and gas drilling, nuclear power plant construction, carbon capture and storage, and renewable energy sources like wind and solar.
Why did cap and trade die? The short answer is that it was done in by the weak economy, the Wall Street meltdown, determined industry opposition and its own complexity.
The idea began as a middle-of-the-road Republican plan to unleash the market to reduce power plant pollution and spur innovation. But when lawmakers tried to apply the concept to the far more pervasive problem of carbon dioxide emissions, it ran into gale-force opposition from the oil industry, conservative groups that portrayed it as an economy-killing tax and lawmakers terrified that it would become a bonanza for Wall Street traders and Enron-style manipulators.
“Economywide cap and trade died of what amounts to natural causes in Washington,” said Fred Krupp, president of the Environmental Defense Fund, who has been promoting the idea for more than two decades. “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.”
Cap and trade was first tried on a significant scale 20 years ago under the first Bush administration as a way to address the problem of airborne sulfur dioxide pollution — widely known as acid rain — from coal-burning power plants in the Eastern United States. A limit was imposed on emissions from the plants, and utilities were allowed to buy and sell permits to comply. Today it is considered one of the most effective environmental initiatives.
Environmentalists and industries resurrected the idea in recent years as a centerpiece of measures to address global warming and growing oil imports. Representatives Henry A. Waxman of California and Edward J. Markey of Massachusetts, both Democrats, built their climate change bill last year in large measure around it.
But in trying to assemble a majority to pass it, Mr. Waxman and Mr. Markey dished out a cornucopia of concessions and exemptions to coal companies, utilities, refiners, heavy industry and agribusinesses. The original simplicity was lost, replaced by a bazaar in which those with the most muscle got the best deals.
Opponents labeled it a tax-and-redistribution scheme.
“We turned it into ‘cap and tax,’ and we turned that into an epithet,” said Myron Ebell of the Competitive Enterprise Institute, a free-market research organization supported by conservative individuals and corporations. “We also did a good job of showing that a bunch of big companies — Goldman Sachs, the oil companies, the big utilities — would get windfall profits because they’d been given free ration coupons.”
C. Boyden Gray, White House counsel in the first Bush administration and a strong advocate of the acid rain cap-and-trade program, said that opponents were largely correct in labeling the Waxman-Markey plan a tax, because so many of the pollution allowances were given away to industry rather than allocated based on past emissions.
“This is potentially a $3 trillion tax,” Mr. Gray said, “which is pretty steep in the best of times, and poison in the worst of times.”
The House narrowly passed the bill last June, but the Senate has moved slowly to take it up. Mr. Kerry and Mr. Graham, along with Senator Joseph I. Lieberman, independent of Connecticut, have been trying to find support for a comprehensive measure.
They, too, have been forced to seek compromise, offering incentives to oil drillers, nuclear power advocates, antitax groups, coal companies and utilities.
Two senators, Maria Cantwell, Democrat of Washington, and Susan Collins, Republican of Maine, have proposed an alternative that they call cap and dividend, under which licenses to pollute would be auctioned to producers and wholesalers of fossil fuels, with three-quarters of the revenue returned to consumers in monthly checks to cover their higher energy costs.
Ms. Cantwell said that cap and trade had been discredited by the Wall Street crisis, the Enron scandal and the rocky start to a carbon credits trading system in Europe that has been subject to dizzying price fluctuations and widespread fraud.
She said her bill would require every pollution permit to be auctioned rather than given away and was 39 pages long, compared with Waxman-Markey, which weighs in at some 1,400 pages.
The Cantwell-Collins plan is almost exactly what Mr. Obama proposed in the campaign and after first taking office — a 100 percent auction of permits and a large tax rebate to the public.
“He called our bill ‘very elegant,’ ” Ms. Cantwell said. “Simplicity and having something people can understand is important.”

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