Center for American Progress

Rejection of Cap and Trade Affected by Special Interest Money

Rejection of Cap and Trade Affected by Special Interest Money

Special interest money has played a big role in public officials rejecting the "cap and trade" tool created and sharpened by Presidents Reagan, Bush, and Bush.

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Cap and trade was developed as a more flexible, market-based system to reduce environmental pollution compared to the so-called “command and control” model employed by environmental laws in the 1970s. The old system required each polluting facility to make a fixed reduction in air or water contamination, which ignored that some facilities could cut pollution more cheaply than others.

Cap and trade is a cost-effective alternative that allows the firms that can more cheaply reduce their emissions below their required limit to sell any additional reductions to companies that are not able to make reductions as easily. This creates a system that guarantees a set level of overall reductions while rewarding the most efficient companies and ensuring that the cap can be met at the lowest possible cost to the economy.

The Reagan White House conceived the first cap-and-trade program to reduce pollution. It was used in the 1980s to phase out lead in gasoline at a lower cost. President Reagan also signed the Montreal Protocol in 1987 to slash the production and use of chemicals that deplete the upper ozone layer essential to screen out cancer-causing ultraviolet rays. His administration established a cap-and-trade system to implement the chemical reductions the protocol required. President George H.W. Bush, Reagan’s successor, was the first president to propose the employment of a cap-and-trade system in an environmental law. The Clean Air Act of 1990 includes his proposed cap-and-trade system to reduce the sulfur pollution from power plants responsible for acid rain. And President George W. Bush also included a cap-and-trade mechanism in his “Clear Skies” bill that would have amended the Clean Air Act.

Why have Republicans and a few Democrats, then, rejected this successful policy innovation developed and deployed by Republican Presidents Reagan, Bush, and Bush? In Gingrich’s case it may be the $350,000 from oil and coal interests his political committee received during the first quarter of 2010 alone. In addition to giving money to Gingrich, Big Oil, Dirty Coal, and other special interests have spent hundreds millions of dollars over the past two years to convince legislators, politicians, and citizens to oppose cap and trade and other measures that would create jobs, cut oil use, and reduce pollution. Center for American Progress Action Fund analyses find that these interests spent at least $68 million in 2010 alone to air misleading and fictitious ads on global warming. What’s more, many of these same interests spent over $500 million in 18 months to lobby Congress to oppose clean energy and global warming legislation.

Special interest money, then, has played a big role in public officials rejecting this tool created and sharpened by Presidents Reagan, Bush, and Bush.

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