Cap-and-Trade: Will Dem Donors Get the Spoils?

Yesterday, a draft copy of the Senate version of cap-and-trade leaked from the Boxer committee. The Boxer bill offers little information on the biggest issue in cap-and-trade: Who gets the allocations - permissions to emit - which will be worth hundreds of billions of dollars?

Yesterday, a draft copy of the Senate version of cap-and-trade leaked from the Boxer committee. A public draft is expected today. The bill proposes a 20% cut in greenhouse gas emissions by 2020 as compared to 2005 levels and expanded regulatory authority for the Environmental Protection Agency.

But here's the fascinating thing: the single biggest issue in cap-and-trade goes entirely unmentioned in the Boxer bill. That issue is, "Who gets the allocations?" Allocations - permissions to emit - will be worth hundreds of billions of dollars. The pure theory of cap-and-trade calls for auctioning them to the highest bidder. The House version of cap-and-trade instead assigned them to the biggest donors.

Colossal fortunes turn on this decision. Yet the Boxer bill offers little information. Apparently 25% of the allocations will be auctioned. The destiny of the remainder is undecided or anyway unannounced. Perhaps it will be decided later, after hearings and, hem, other consultations. In which case, instead of auctioning off the allocations to the highest bidder, they may instead  be quietly assigned to the most wired lobbies and the most generous Democratic donors.