On assistance for emissions- or energy-intensive trade exposed industries, it’s still difficult to make a judgment in which scheme is more generous. Both ACES and CPRS provide assistance based on production times an industry-wide average emissions intensity. The CPRS gives firms free permits for only a portion of the calculated liability - 90% or 60%, depending on their emissions intensity (plus the Global Recession Buffer or whatever it’s called, which still leaves the totals below 100%). as you say, the CPRS doesn’t limit the proportion of the emissions cap that can go to EITE firms. On the other hand, ACES provides EITE firms with allowances for 100% of their deemed liability, but limits the total proportion of the cap that can be given out for this purpose (I think it’s 15% from 2014, then reducing along with the cap). The definitions of EITEs may well not be quite the same under the two schemes; if given the structure of the US economy (bigger and less trade exposed than ours) the compensation offered is enough to cover all qualifying firms, ACES may be a bit more generous. It’s too early to tell!

More importantly, the EITE measures in both schemes are not nearly so bad as you paint them. Neither undermines the cap, and both provide incentives for firms to reduce emissions. There are two reasons for this. Firstly, allowances and permits still have a market value even if freely allocated at first. Using a free permit carries an equal opportunity
cost - a firm that emits gives up the money they could make selling the permit. EITEs will still have every incentive to choose abatement options that are cheaper than the permit price. And since assistance is based on industry average intensity levels, more efficient firms are overcompensated and dirtier firms undercompensated, providing further incentives for firms to cut their emissions intensity. These assistance measures do increase the costs of the schemes, because they are production-linked and hence provide no incentive to cut emissions by cutting production. In some instances - very dirty low-margin operations - cutting production may be the lowest-cost abatement option. But this cost does not radically undermine the schemes as is commonly argued.

This brings me (at length! Sorry!) to the larger point that the CPRS ain’t so bad at all. We can have a separate argument about what the targets should be. But as a mechanism for reaching those targets, the CPRS is pretty good. The compensation measures are certainly expensive in terms of foregone revenue, but with one big exception (the fuel excise offset - excruciatingly stupid; thanks, PM, for making Brendan Nelson look like a trendsetting policy thinker) they don’t increase the economic cost or undermine the scheme. The point of cap-and-trade is NOT to punish anyone or to make anyone poorer: it is to change incentives and the relative prices of less- and more-emitting goods and services. It doesn’t matter if people are partly-, fully- or over-compensated, so long as the compo does not interfere with those incentives. The EITE assistance gets a B+ on that front, while
the fuel excise offset gets an F. Everything else is fine.

That’s environmentally and economically speaking. There’s still the issue of whether the compo
is good value, rather than just harmless. Beats me - industry could probably scrape by with less, households could take it on the chin, and the spare
permit revenue could fund research or adaptation or tax cuts or deficit reduction. And if the CPRS is passed, my guess is that ultimately it will do all those things - the Government’s going to be strapped for cash for a long time, and all those handouts will look pretty tempting for clawing back. But if our priority is to get going with emissions cuts, rather than make sure public spending is sensible (so unfashionable!), the CPRS should be passed in a heartbeat.

There’s a lot more to be said, and many more criticisms to be answered; but this post has been sufficiently long-winded for now. Nerdy screeds aplenty may follow!

Full disclosure: I work for an industry organisation, but my views are my own.. I am not a grubby rentseeker, but I know plenty.

Anti pollution laws need to be managed by national governments which are answerable to the voters -not by global bankers answerable to no one. These laws should not be designed to fleece the long suffering public of further dollars in a time of extended global deflation, but rather to foster change in energy use patterns.

Enough people are now seeing this for the scam it is. It won’t get through the US Senate I do not believe as more and more people work out that everything they buy will cost 10% more. It hasn’t worked in Europe and it wont help to fix anything here. In any “pay to pollute” scheme, the biggest and richest polluters get to keep polluting because they can afford to! Small busines will go out of business and we the people will continue to pick up the tab.

The Americans are doing better than us with their proposed scheme! Now that is embarrassing….

I remember when Rudd was elected. He looked good. He said some good things. He signed Koyoto. Sorry Day….

But then Mr Obama started his efforts.

Now Mr Rudd by comparison, simply looks like a pawn in the hands of big business. ….

Awkward!…..