Andy Van Horn, Van Horn Consulting

After the November elections and the December 2010 Cancun COP16, U.S. states and Congress will re-examine legislative goals and mechanisms that made “cap-and-trade” a successful framework for SO2 and NOx reduction in the U.S. and the model for the European Union Emission Trading Scheme. Distrust of markets, overly complex regulatory features, scientific uncertainties and errors publicized in “Climate-gate” coupled with poor explanations about emissions trading enabled opponents to characterize cap-and-trade as “cap-and-tax” and to prefer “command-and-control” or no GHG regulation at all. The failure to understand offsets, misplaced concerns about “leakage,” the touting of auctions as a ubiquitous revenue source for government and for redress of inequities, combined with loudly-voiced bias against profits, which are essential to provide incentives for improved technologies, have obscured the reasons for global GHG reduction and confused the essential role of markets. Current U.S. cap-and-trade legislation is too complex to be widely accepted and may be too difficult to implement. This presentation will point out areas that continue to delay U.S. legislation, i.e., where “the perfect is the enemy of the good,” and will identify key elements like forward markets, offsets, environmental monitoring and verification that remain essential to achieving environmental goals while containing costs.