It seems hard to believe now, but only a few years ago it looked like we might get federal cap-and-trade legislation to address greenhouse gas emissions.  Almost exactly four years ago the House of Representatives passed the American Clean Energy and Security Act, which would have done just that.  Within about a year, cap-and-trade legislation died in the Senate.  Comprehensive climate change legislation has not seriously been on the agenda since.  Seth Jaffe’s post late last month noted the connection between the lack of legislative action and the President’s recently released “Climate Action Plan.”

If we needed a reminder that a piecemeal regulatory approach is likely to be less efficient than a comprehensive legislative approach, a June 20th federal report from the National Academies, reinforces the point.  The Report, prepared at the request of Congress by the inspiringly named “Committee on the Effects of Provisions in the Internal Revenue Code on Greenhouse Gas Emissions,” contains detailed analyses of various provisions of the tax code and their impacts on greenhouse gas emissions.  The bottom line: assessing the impact of tax policy on greenhouse gas emissions is complicated, but current tax policies probably do very little – maybe nothing – to reduce such emissions.  (The renewable energy production and investment tax credits were one of the few tax policies found to clearly reduce emissions; some policies, like certain subsidies for biofuels, were found to increase net emissions, although the effects were small.)

The lines from the report most likely to gain attention are the Committee’s conclusions that “current tax expenditures and subsidies are a poor tool for reducing greenhouse gases and achieving climate-change objectives” and that “many studies have found that the most reliable and efficient way to achieve given climate-change objectives is to use direct tax or regulatory policies that create a market price for CO₂ and other greenhouse gas emissions.”  The conclusions are hardly novel, and this report is unlikely to change the current political dynamic.  Given that dynamic, there is a reason we have a “Climate Action Plan” rather than a climate action statute.  Some prognosticators are suggesting that we might see conservative efforts to present an alternative to the President’s Climate Action Plan, which could include policies such as a carbon tax.  I am skeptical.  For now, we should expect climate policy to be driven by federal regulatory action and patchwork state policies.