More than 11 years after the establishment of the Kyoto Protocol, the U.S. House has passed the Waxman-Markey bill, the first greenhouse gas reduction measure to clear either house of Congress. While legislation in the U.S. to address climate change is long overdue, the bill falls far short of what is urgently needed.

U.S. industry groups have successfully used intensive backdoor lobbying to turn the already weak emissions-control proposal into a probable long-term windfall in taxpayer-supported profits.

The Waxman-Markey bill looks to reduce emissions 17% below 1990 levels by 2020, a much lower target than the 25-40% that a consensus of scientists say is necessary to avert catastrophic climate change (Bloomberg News, 06/18/09). The bill would also greatly weaken the government’s ability to regulate carbon emissions from coal power plants.

Permits and Offsets: A Flawed System

Rather than directly tax corporate pollution, the bill bases itself on a dysfunctional market system known as “cap and trade.” Under a cap-and-trade system, the government places a limit on overall carbon emissions and sells emission permits to individual corporations who can trade the permits among themselves. Here, the bill provides a huge subsidy to corporations in that 85% of the permits will be provided free to them by taxpayers.

The bill includes an “offsetting” scheme, which allows corporations to exceed the federal emissions cap if they invest in greenhouse gas reduction elsewhere in the world. Although theoretically reducing global emissions, the benefits of such carbon offsets will likely prove all too illusory.

According to the Government Accountability Office, it is virtually impossible to establish when carbon offsets represent real reductions in emissions. Similar systems of cap and trade with offsets in Europe completely failed to achieve their avowed goals of emissions reduction, but have yielded enormous profits for corporations.

“Waxman-Markey would allow almost 20 years of cheap, essentially fraudulent offsets to meet all required reductions in pollution,” according to Laurie Williams and Allan Zabel of carbonfees.org (Philadelphia Enquirer, 06/24/09).

Though the bill received support from environmental groups tied to the Democratic Party, it has encountered strong opposition from Greenpeace: “The Waxman-Markey bill sets emission reduction targets far lower than science demands, then undermines even those targets with massive offsets.” (www.greenpeace.org) Friends of the Earth also opposed the bill, noting that it would allow corporations to “avoid real emission reductions until 2027.” (www.foe.org)

“Sub-Prime Carbon Market”

While publicly scored as a victory for the environment by the Obama administration, corporations have silently marked their own win columns. Corporate lobbyists have pushed for the cap-and-trade system to be a complex, derivative-based one, and the House bill achieves that goal.

There are strong parallels between the financial instruments contained in the bill and those that contributed to the current global financial disaster. According to Tyson Slocum of Public Citizen, industry “wants lawmakers to create a brand new revenue stream for its bottom line, and cap and trade would do it.” (Mother Jones, 06/08/09)

Real Solutions for Climate Change

The global environmental crisis will not be solved by permit-trading systems. Such systems are inherently flawed, even if they could somehow be achieved free of corporate lobbying and corruption.

Capitalism, with the maximization of profits for corporate owners as its only objective, inherently tends to externalize all human and environmental costs of economic activity. It will always trade global needs and the future of humanity for short-term private profits.

A real solution for climate change will require a rapid scaling down of fossil fuel emissions and major investment in clean energy alternatives. This can only be achieved with democratic planning, through which the global working class will replace the corporate war for profits with a sustainable economy that can fulfill the needs and aspirations of all humanity.

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