How well will cap and trade work?

The EPA analyzed the likely impact of the McCain-Lieberman "Climate Stewardship and Innovation Act" and found... a lot of stuff. Download it if you want it. I haven't had a chance to really go over it in much detail. Hopefully I will later today. But a key takeaway is here:

Under S. 280 total U.S. GHG emissions are approximately 25% lower than Reference Scenario emissions in 2030, and 44% lower in 2050....

In the reference case, global CO2 concentration rises from 380 ppm in 2005 to 718 ppm in 2095. Assuming that the U.S. adopts S. 280, Kyoto countries (excludingRussia) reduce emissions to 50% below 1990 levels by 2050, and all other countries adopt GHG emissions targets in 2025 and return emissions to 2000 levels by 2035, the global CO2 concentration in 2095, while not stabilized, is lowered to 491 ppm. The incremental effect of S. 280 on lowering global CO2concentration is between 23 and 25 ppm.

As you can see, a 50 percent reduction by 2050 is barely enough to keep concentrations in the USCAP-accepted range of 450-550 ppm. And, I should point out that 44 percent is... less than 50 percent. Which certainly doesn't bode well.

But that's actually not my big concern right now. We've known for a long time now that, in the realm of ambitious climate-change schemes, McCain-Lieberman aims fairly low. Once something (anything) like McCain-Lieberman gets passed, though, I think it's reasonable to become optimistic about what will happen in the future. It seems perfectly plausible to me that, over time, the impact of even a relatively weak bill will incentivize green energy in so many ways and to such a degree that we might actually exceed our targets by quite a bit. Sadly, I'm much less optimistic that we'll ever pass a good enough law to begin with. My sense is that the economic impacts of a policy like this one are deeply uncertain and that a study from the Bush EPA won't necessarily go a long way towards pinning them down or finding ways to mitigate them, which is really what we need. But I guess we shall see...