The greenosphere is all abuzz about a new video from Annie Leonard, creator of semi-famous anti-consumerism video/book The Story of Stuff. It's being billed as a definitive debunking of cap-and-trade, but it's more like a perfect representation of all the confusion and misplaced focus that plagues the green left right now. Here it is:

Now, I suppose I'm generally viewed among greens as a defender of cap-and-trade -- or, in the less charitable version, a defender of the "party line," a shill for the administration, a sell-out "insider," whatever. A "pro" in the "pro vs. anti cap-and-trade" argument. But that's not how I see it. It's more that I think it's the wrong argument. Activists like Leonard are just mis-identifying the barriers to effective climate action. I'll have lots more to say on that subject soon, but for now, let's focus on the video.

The Story of Cap & Trade

The video contains four basic arguments against cap-and-trade:

1. Allowance giveaways are bad. This is true. It would be better to auction 100% of the pollution allowances and use the revenue to invest in clean energy and protect consumers. The bill in Congress gives away too many allowances (Leonard elides the fact that the bulk of them are devoted to consumer protection, though it's open to debate whether they'll be used that way, and some Senators are pushing for more giveaways).

The most obvious solution to this is to give away fewer allowances. Yet Leonard and crew imply that allowance giveaways are inherent to cap-and-trade and the only solution is to ditch it. They imply that other "real" solutions would somehow be immune to polluters seeking loopholes and special favors, but never explain why.

The allowance giveaways in the climate bill reflect the power of the fossil fuel lobby. Switching policies would not diminish that power. Reduce that power and any climate policy gets better. The policy isn't the problem; the power of the fossil fuel lobby is.

2. Offsets are bad. Leonard's "argument" against offsets, if it can be called that, is fairly typical for this genre. She highlights a few ridiculous-sounding projects from the Clean Development Mechanism (CDM), implicitly conflates those projects and the CDM with offsets generally, and then concludes, based on the anecdotes, that offsets are bad and they make cap-and-trade toothless.

The reality is far more complex. The quality of offset projects varies widely, as do enforcement mechanisms. The bill in Congress actually contains some fairly stringent measures for policing offsets. Many people close to international policy negotiations believe that high-quality offsets are a vital measure enabling a stronger international treaty. (See Glenn Hurowitz.) Many think that emissions reductions will prove cheap enough that offsets won't be extensively utilized in early years. Others think that moving emission reductions overseas short-sells the clean energy revolution needed here in the U.S.

These are complex topics, and they're not well-served by the simplistic, hand-waving dismissal of offsets in Leonard's video. Regardless, if you think offsets are a problem, the obvious solution is to reduce the number of offsets. But again, Leonard and crew pretend that offsets are inherent to cap-and-trade and the only solution is to ditch it. Again, they pretend that "real" solutions would be immune to similar loopholes and giveaways.

One more time, from the top: The number of offsets in the climate bill reflects the power of the fossil fuel lobby (and the common impression that reducing emissions will be costly). Switching policies would not diminish that power (or that impression). The policy isn't the problem; the power of the fossil fuel lobby is.

3. Carbon markets are bad. I hesitate to call this an "argument" in the video, since it mainly consists of using the words "Enron," "bubble,""Wall Street," and "scam" suggestively, without saying anything at all specific about why this commodity market -- which would be one of any number of commodity markets, most of which work perfectly well, including the carbon market in Europe -- would be uniquely evil. I'm with Kevin Drum: there's no meat here. I've never seen anything to this argument but the kind of suggestive handwaving that's in the video. I don't know why the green left has decided that markets are bad, in and of themselves, but it seems both politically unwise and substantively thin.

It's certainly true that certain financial instruments should be eliminated or regulated more heavily; this is true for financial markets in general. There's some fairly strong language in the bill about regulating carbon markets; that language will likely be folded into the larger financial market reforms that the Senate will address soon. But no one, outside this narrow topic, is suggesting that markets should be abolished!

Remember, trading of allowances is the feature of cap-and-trade that makes it more flexible than a flat tax that applies to all entities equally. This was always the argument for C&T over a tax. Instead of rebutting that argument, Leonard et al. seem instead to have decided that "market Goldman Sachs derivatives bugga bugga!" suffices.

4. Cap-and-trade is a "distraction" from "real solutions." Of all the arguments, this is, forgive my bluntness, the silliest. The idea is that cap-and-trade has (for reasons never explained) magically come to dominate the policy conversation and made people forget about other options. "Cap-and-trade makes citizens think everything will be OK if we just drive a little less, change our light bulbs, and let These Guys do the rest." Whaaat? It does? Any empirical evidence for this? Polls? Surveys? Anything? Honestly, it's a depressing hallmark of liberalism to view progress -- or the impression of progress -- as a deflating force. Over on the other side of the aisle, they're constantly declaring victory. Why do we think they do that? Does it seem to be de-motivating the conservative base?

First of all, there are reasons cap-and-trade has garnered the most support, but C&T bashers are so busy attacking a caricature they can't see them. Second of all, what is the sociopsychological theory here supposed to be? If we just stopped talking about cap-and-trade, everyone would wake, as though from mysterious trance, and start talking about "real" solutions? The only reason the world hasn't come together around tough measures that would financially damage fossil fuel companies is that the world's citizens are, like kittens, distracted by the shiny cap-and-trade bauble?

This is the worst feature of the C&T bashers (and carbon tax advocates): their utter political naivete and Romanticism. There's no plausible story about power here, and no real effort to tell one. It's just: "Once everyone hears our clever arguments, the world will unite around Real Solutions!" It's irresponsible.

The video concludes by saying, "the next time somebody tells you cap-and-trade is the best we're going to get, don't believe them." But why not? Literally nothing in the video even addresses that point! It's a fundamentally political point that the video just wishes away. At this point the green left desperately needs less Mead and more Machiavelli. Unless greens get serious about identifying the loci of political and financial power, identifying ways to block or leverage that power, and building power of their own, they're going to lose. Policy arguments are more-or-less orthogonal to that important undertaking, not a substitute for it.

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There are also some straight-up errors in the video. Europe's trading system is working, despite relentless hype to the contrary. Any program that caps and reduces CO2 would help those hurt by climate change, even if the money was distributed inequitably. The Clean Air Act does not enable EPA to "cap" carbon the same way cap-and-trade does, and would not serve as an equally effective substitute for a cap. Etc etc.

But my larger critique is that the video, and the bashing of cap-and-trade generally, just misses the point. I've got longer posts on this coming up, but here's a capsule summary: it's clear that politics as currently constituted, particularly in the U.S., will not tolerate a high price on carbon. So we're going to end up with a fairly low price, hopefully with mechanisms to automatically raise it over time. A different carbon pricing mechanism won't solve that problem.

The smart response would be to secure the low-and-rising carbon price and then start pushing other emission reduction policies, namely sector-specific regulations, industrial policies focused on capacity building, and large-scale investments in RD&D. If all the C&T bashers would turn their energy in that direction, we'd be having a much more productive conversation. Instead they're echoing arguments from Exxon and Don Blankenship, vaguely hoping that if cap-and-trade is politically destroyed, a herd of ponies will thunder in to replace it. Once and for all: there are no ponies.