Generally this looks very positive, although I would have liked to see a bit more on regulatory reform.  It is primarily a financial bill, redistributing wealth from one sector to another, with some of the big beneficiaries being R&D (smart grid, etc.)  This is fine as far as it goes, but I sure would like to see someone acknowledge how much can be done simply with regulatory reform.  Not because we don't need both, but because regulatory reform doesn't need fiscal authorization.  And as anyone who's been in DC long enough goes, there is a big difference between authorization and appropriation.  (It's why House Ways & Means is such a powerful committee.)  Decoupling is certainly a good step in that direction though.  And as you say, it is remarkable how far we've come in the last 18 months.

If it 100% of permits are auctioned, then there is no almost no trade. Because permits are generally bought as needed. So secondary markets are small to non-existent. Please don't confuse cap n' trade with cap n' auction.  The difference is critical.

I'd like to hear some more elaboration on "clean-coal."  Last time I checked, Obama was all about liquified coal to fuels.  Does he still sing those praises, or is he taking a more climate conscious stance to that?

BO.com: "Coal is our nation's most abundant energy source"

Umm . . . isn't solar and wind the most abundant energy source?  BO is an ignorant pimp for coal, make no mistake about it.  

It's stunning how far global warming has come in the last few years (as runners drop like flies in Chicago from the heat).  Greens should be as happy with this BO plan as someone dying of thirst is happy getting spit in the face.

I've read S&N's book, and it looks like Obama (or at least Obama's energy people) have as well.  My reading of S&N is that investment must be on an equal substantive footing as reducing carbon, but from a message and framing standpoint, investment is a much better lead than simply limiting carbon. I've never seen them say that we should not limit carbon emissions.  In fact, I've seen them say both in their book and in their online postings, that we must limit emissions, but that the frame is wrong.  And that it's wrong to dismiss investment out of hand.  And Obama, by adding a substantive investment piece, seems to agree.

From a message point of view, if Obama becomes the Democratic nominee, I'm confident he'll talk more about investing in clean energy and creating new jobs than he will about limiting carbon emissions.  Why?  Because it's a much better message than limiting emissions.  And it will build the kind of political capital necessary to pass substantive cap and trade.

But David clearly has something personal against S&N.  First comparing them to Bjorn the denier, and then, when a major Presidential candidate proposes damn near precisely what they've been proposing (linking emissions reductions and investment), you use it as an opportunity to set them up as straw men once again.  

What gives?  

Responding to GL above: "If it 100% of permits are auctioned, then there is no almost no trade. Because permits are generally bought as needed. So secondary markets are small to non-existent. Please don't confuse cap n' trade with cap n' auction.  The difference is critical."

The whole point of Cap+Trade or Cap+Auction is the cap. Ignoring for a minute the debate between carbon taxation and C+T or C+A (this is where the real debate should be, as the Stern Report elegantly argues) the cap in either system is arbitrary and the major lever of the entire policy. Permits cannot simply be "bought as needed" unless the cap is unreasonably high. Most of the proposals out there, including Obama's, talk about capping at some moderately reduced level in the short-term (up to 2020) and reducing it drastically in the long-term (mostly defined as 2050), as investment and R+D make it more economically feasible to move away from current energy and production practices. Thus, with limited amounts of emissions allocations available, buyers are forced into secondary markets. This is the entire point of either C+T or C+A--the difference between them lies in initial allocation of emissions, again as argued by Stern.

Gar,

The trade is implicit in the cap structure.  The auction simply refers to whether the starting value of the cap is set by auction or allocation.  Once established, all the models include a way to trade, essentially modeled on what we've already done with  the tradeable sulfur market.  And an auction is VASTLY preferable to an allocation. Again, the sulfur experience is instructive.  In that case, we allocated, with the historic emitters being given a free pass.  The result was that new, low (but non-zero) sulfur plants faced an economic hurdle to build their plants, even while the old, dirty plants faced no economic hurdle to continue operation.  The price of sulfur did eventually come down through trading, but it took much longer than it need to have because most of the market had no incentive to participate.

Additionally, an allocation system creates a huge incentive to over-allocate, as the folks with the allocated gift - who represent the established, status quo - have big lobbying arms that push hard  to maximize the size of their gift.  This means that the cap is too high, and those big polluters end up not only not having to pay, but also having extra permits that they don't need, which they can sell to the market.  In other words, the biggest carbon sources not only have no incentive to control their carbon, but find themselves making a lot of money trading carbon credits they got for free... all in the name of carbon control, of course.  (This has happened in Kyoto, where one of the biggest economic beneficiaries of the agreement has been the coal-fired power industry.  If you need a test of whether your carbon policy worked, NOT incentivizing coal-fired power seems like a good test... and yet this is exactly where an allocation framework leads.)  

Bottom line is that while the universe of carbon legislation certainly has more options than are currently in the public debate, once we decide on a cap & trade framework, we ought to push very hard for an auction rather than allocation methodology.  The latter simply defers the time until we get serious about carbon reduction.  Time which Hansen seems to think we don't have.

Anybody?  does cap and trade or cap and auction only involve industrial and utility generation, or does it also include commercial and governmental buildings?  but only cafe can deal with auto emissions under this scheme, right?

Most of the plans that I am aware of are not economy-wide.  Just about all of them include power, up to some limit (e.g., RGGI only caps emissions from power plants >25 MW). Some of them also include thermal energy sources from selected industrials.  (e.g., CA).  Most ignore vehicles and small residential/commercial sources on the basis that these are simply too difficult to regulate through this metric, and therefore target through some combination of CAFE, building codes, fuel taxes, etc.  

For what it's worth, my personal feeling is that this is the right approach, as it's really hard to see how you would monitor carbon emissions from every tailpipe and figure out whether some individual had a credibly defensible amount of carbon to buy/sell.  (As a friend recently put it, there are four thing that matter for automotive carbon emissions: what fuel you use, what car you drive, how you drive and how much you drive.  Of those four, the last two are really hard to regulate - but if you only regulate the first two, you miss half of the problem.)

Keep in mind that controlling carbon emissions is fundamentally about heat and power.  39% of US GHG emissions come from power generation and 28% come from heat (18% of which is the big stuff in the industrial sector).  So if you "only" cover those two sectors, you've got >2/3rds of the GHG emissions capped.  Transportation is significant at 32%, but only 19% of that is passenger vehicles.  So while automotive CO2 emissions are individually significant (e.g., one of the most significant places where individuals can affect their carbon footprint), it is far from the most important regulatory pressure point from a total GHG perspective.  Worth keeping in mind when we think about tradeoffs between CAFE and other sectors in DC.

Focus on efficiency?  There's nothing inherently "good" about being efficient.  Why are we cutting corners when we could be eliminating problems at the core?  I'm not talking about sweeping, extreme changes, I'm talking about things that we would have started doing years ago if business hadn't stuffed a wad of cash in the mouth of government: developing a nationwide railroad, cutting reliance on coal, signing Kyoto, ending oil subsidies, planting something other than corn, etc.

Coal and corn are this man's interests.  Obama is only implementing strategies that will allow these industries to continue taking from the future for the sake of a luxurious present.  It will be old fashioned industrial practices with a new coat of paint.  

How does Obama define green tech?  He defines it as coal with a filter.  But let's face it: in 19 states it's unsafe to eat fish because of mercury contamination due to coal.  Asthma, multiple-chemical sensitivity, and cancer are epidemic - ask any health care professional living in the coal belt.  And we call this green?  (Don't even get me started on the VAST expanse of subsidized, barely-profitable, overproduced monoculture that is industrial corn farming in the midwest!  Apparently this passes for green tech, too!)  

There's no such thing as clean coal.  

EVERYONE!  SAY IT WITH ME, NOW!  
There's no such thing as clean coal!  
There's no such thing as clean coal!  
There's no such thing as clean coal!

How about this one, for Obama:

Ring around the rosie
A pocketful of coal, see?
Ashes, Ashes
We all fall down!

There's nothing "ambitious" about these policies, and there's nothing green about Barack Obama.  

You've probably heard my rant before, but renewable electricity standards are, in many ways an inefficient way to do carbon because they all start with a path rather than a goal.  Carbon capping policies - if done right - will provide economic incentives for all the technologies rewarded with RES programs, plus a lot of other technologies that aren't among the favored few.  This is important because (a) we have lots of technologies that are available to reduce carbon; (b) the total suite of technologies available is vastly larger than the narrow list included in existing portfolio standards, and; (c) the scale of our challenge requires that we use all of them.

Indeed, we're already seeing the limits of the RES approach (witness the USA Today article last week about how the prices for RPS credits are going up because they are almost all supply constrained.  This isn't because we don't have lots of options for clean energy, but rather because the existing regs have only granted eligibility to a narrow list of clean energy techs.)  Which is fine if our intent is to create new industries, favor specific techs, etc., but is a sloppy way to do carbon.  Controlling carbon will take conventional solar-wind-hydro renewables, but will also need the full participation of biomass, efficiency, nuclear, conservation and lots of other techs we haven't yet thought of.  RES policy, being based on paths rather than goals is by design unable to be all-inclusive.

...just telling utilities that by a certain year, they have to be down to a certain amount of carbon, do it however you have to -- but no buying or selling, just the cap?

Why limit to utilities?  What matters is that we drive down carbon emissions, not that we only drive down those carbon emissions that are associated with the operations of investor owned utilities.  And let's not lose sight of the fact that those utilities have done an abysmal job of controlling carbon to date, now running at half the efficiency they ran at in 1910.  To my way of thinking, putting the burden for controlling carbon on electric utilities is like putting the burden for the NBA title on a bunch of midgets.  Sure they could work really hard at it and we could all be ennobled by their occasional successes, but why constrain ourselves?  

Far better simply to provide an incentive for controlling carbon to everyone.  If utilities want to participate, that's fine.  If they'd prefer to follow their past century of behavior, that's fine too, but let's make sure that they feel a lot of financial pain for doing so.  But for goodness sake, let's put the varsity on the field.  

...personally, I'd rather see the Feds control/own the grid, municipal utilities own/construct much of the generation.  I mean, if we did use public funds to actually build solar/wind/geothermal, the public should own it.  But you could put a hard cap in place with lots of fines if they don't meet it, and the same with industrial facilities, big commercial,etc.  And not put blocks in the way of hooking up to the grid, as you've argued.  

Good correction - thanks.  RGGI does not do that of course, but CA does.  My understanding is that some of the federal proposals do and some don't, but I often hear it coupled to CAFE.

My personal belief is that you probably have to have some kind of technology mandate on the transportation side, simply because the relatively low annual capacity factor on a vehicle means that energy costs are a small fraction of total ownership costs, and therefore taxes on fuel aren't going to do much to shift demand - as the run up in gasoline prices over the last 5 years shows all too well.

But that's personal theorizing - not necessarily what the policies say.

Anyway, thanks for the correction.