John Bryson, President Obama’s nominee to head the Commerce Department, told a University of California Berkeley audience in 2010 that a cap and trade system was a good way to hide a carbon tax from the public.
Bryson, formerly the CEO of Edison International, said that a carbon tax was the new “third rail” of politics because politicians wouldn’t want to tax energy directly.
“I think it’s still unlikely there’ll be a carbon tax bill because I think in the end a very high percentage of the members of Congress think it’s kind of the third rail to support a tax, even if it’s a carbon tax,” Bryson said.
“Greenhouse gas legislation, either with a tax or with cap and trade – which is a more complicated way of getting at it but it has the advantage of politically sort of hiding the fact that you have a tax – but that’s what you’re trying to do,” he added.
Bryson said that carbon taxes – whether open or hidden in a cap and trade regime – were still not the best way to reduce energy consumption and greenhouse gasses. The best way, he said, was a robust system of regulations that penalized energy producers for producing more energy than the government deemed necessary.
“In the great debate between economists and others about whether we ought to be proceeding primarily with market signals or regulatory steps, I believe we ought to do both,” He said. “But the regulatory steps act right now [with] immediate requirements.”
Bryson explained that setting high targets for renewable energy production was the best way to go, rather than waiting for a carbon tax to take effect in the market.
“At our company [Edison International] for example we have quite a large wind energy business across the United States – the drivers are the portfolio standards, the renewable portfolio standards, those are mandates – it’s like the investor-owned utilities in California – 33 percent [renewables] by 2020. That’s a driver. You’re not messing around with what’s the price signal going to be. If you don’t get that done, you get penalized in a big way.”
Bryson was explaining how regulations that force energy companies to adopt a certain amount of green energy worked faster and more directly than policies like a carbon tax or a cap and trade system.
With a carbon tax or cap and trade regime, the government simply tries to put a price on carbon emissions, under the assumption that utility companies will begin producing more green energy because it isn’t affected by the tax or the carbon caps. With regulation, the government simply sets the amount of renewable energy a company must produce, rather than trying to nudge the companies to do it.
