Fred Krupp Has It Right On Cap-&-Trade: AGAIN

Fred Krupp, right, is the Godfather of cap-and-trade and he nails it once again in an opinion piece in The Wall Street Journal. We agree with Mr. Krupp on this issue. He did not state his position on auctioning in the article but we hope he stays true to the Acid Rain Program he helped draft and approve and agrees that allowances should be allocated free. He rejects a carbon tax and we oppose such a tax too.

Some highlights:

Curbing carbon emissions will spur a new generation of competition for the old ways of generating energy.

From an environmental point of view, the difference is stark. A cap is a legal limit on pollution. There is no guessing what will happen -- the level of emissions is set in law, and enforcement of
that limit proceeds accordingly.

Moreover, to require that other countries make the reciprocal commitments necessary to lower global pollution, we have to enact our cap -- and have other nations do the same in a transparent, verifiable and enforceable way. A carbon tax doesn't make such a system of commitments
possible.

From an economic point of view, the case for a cap is also strong. A well-designed cap will push our economy towards clean, domestic energy in the most flexible way possible, leaving business free to grow and thrive.

The system directly engages the profit motive in pursuit of the environmental goal. In addition, establishing the cap level in law will give companies the certainty necessary to make major, job-creating capital investments now.

Finally, rather than debate economic theory, we can look at history. In 1990, President George H.W. Bush and a Democratic Congress joined together to pass the world's first cap-and-trade law to limit the pollution that causes acid rain. It was a simple, straightforward plan to have government set the rules and let the people involved solve the problem. It worked faster and cheaper than anyone predicted.

Mr. Krupp is president of the Environmental Defense Fund.