Cap and Trade ism

Don’t you love how politicians (Democrat or Republican) are able to create new dirty words out of just about anything! While the environmental left screams about the evils of big business, the right is on a mission to turn “Cap and Trade” into one of Carlin’s “seven words you can’t say on television”. Now that the House has passed a Cap and Trade bill, you can be sure that “socialist, communist, and big government” are soon to follow.

The rational middle says to both sides, “Put down your slogans, step away from the slogans!”

The CBO, the independent auditing arm of Congress that last week released a partial review of health care reform (a review that conservatives have been pointing to and underlining), has estimated that the bill that passed the House will cost American families $14.58 per month in increased energy costs.

$14.58 per month.

Predictably, conservatives are saying (this week) that the CBO is flawed and that number is wrong. Folks, if your teenager tried that logic on you domestic warfare would ensue. You can’t have it both ways, but politicians who came of age before internet search engines came into wide use still haven’t figured out that their b.s. will be caught.

So Cap and Trade is relatively inexpensive, will limit CO2 pollution, and probably force some companies to turn towards alternative energy sources. I still don’t like it. Oh I know that it is the best solution going in Congress and that the problem cries out for solutions; but I still don’t like it. My dislike has nothing to do with the notion of government action. We live in a democracy. Flawed as it may be (as anything run by humans will always be), this democracy gives the people a voice in the marketplace. If we the people can’t effect change in the marketplace, then why have a democracy? My problem is with the mentality of Cap and Trade.

Cap and Trade is part of a family of strategies known as “end of the pipe” or mitigation strategies. It is the act of putting toothpaste back in the tube. The work that should be done involves keeping the pollution(waste) from happening in the first place. This is not revolutionary thinking. Thousands of companies around the world, from a small local dairy in Brazil, to Proctor & Gamble, to huge industrial polluters like Alcoa, have executed successful case studies in Total Quality Environmental Management (TQEM). TQEM and other strategies involving resource management aim to stop pollution before it happens.

Let me put it in a “pro-business” format. If your business buys 100 units of resources and turns them into 80 units of product and 20 units of waste, you have an opportunity. The opportunity is the 20 units of waste, which you could turn into product or not buy in the first place. The various projects that have been done on that subject; finding economical ways to eliminate heat loss, reduce water use, reduce waste water discharge, produce more with less scrap or sludge, and generally be more efficient. The problem is perception; if a manager sees a five year project that has a big price tag and might break even, that manager might take the inefficient but less expensive short term option and by a pollution license (Cap and Trade). In other words, nothing gets done; the business doesn’t improve and the environment suffers. If that manager is bombarded daily by commentators and politicians screaming about climate and polar bears, costs and communism, he/she might just bury their head in the sand.

That is the reason that the people, through their voice in the marketplace (government), have pushed most of the reforms on pollution seen in this country. From limiting acid rain that destroys valuable hunting ground, to stopping water pollution that keeps you from eating the fish you catch in a river, to banning visible smoke pollution from cars and factories, none of these steps were taken voluntarily by industry; not because industry is evil, but because they have to make a living.

The major problem with all of this is the adversarial relationship that has developed between government (us) and business. This is counterproductive, and must be changed. Energy reform and climate change is an excellent topic to try out some change strategies. Time for one of those plan things…

  1. Adopt Environmental Managerial Accounting standards to support TQEM and Total Resource Management practises
  2. Use the government as a support/resource for business; pooling best practises and supporting business in their implementation
  3. Provide financial assistance to companies for large TRM and TQEM projects; tax credits are bad…be a business and provide specific financing for a specific action plan
  4. Spend tax dollars (yes I know, I don’t like them any more than you do, but it is an investment) to rebuild our infrastructure to support alternative energy
  5. Provide direct assistance to large metro areas to effect their transition to alternative energy sources

There! The rational middle is on the record, but I am sure that there are better plans out there than the one sketched out above. If your plan looks at all of the problems in balance, and addresses them in a reasonable way, then it is probably better than what we have been listening to on TV!

The world is listening….