DeFazio’s Reply

Dear Mr. Squires:

Thanks for your message in opposition to a cap-and-trade system and H.R. 2454, the American Clean Energy and Security Act of 2009.  I share your concerns about the inefficiencies and unnecessary costs of a cap-and-trade. I urged my colleagues in the House of Representatives to consider alternative approaches.  My efforts to improve the bill were rejected and I voted against H.R. 2454.

As you know, a cap-and-trade system would set pollution limits (the “cap”) and distribute allowances to industry that can be bought and sold to meet emission targets (the “trade”).  Proponents of such an approach believe that “the market” is the best way to bring down emissions levels of harmfulgreenhouse gases (GHGs).

Frankly, I fear that a market-based approach such as a cap-and-trade system would reward market speculation over innovation.  A cap-and-trade scheme is already in place in Europe and has largely been a failure.  In 2007 – the most recent year for which we have data – GHG emissions in Europerose by 1.1%; that’s three consecutive years of higher emissions.  And emissions are increasing in Europe while investors and speculators make billions by buying and trading pollution credits.  To this effect, I recently authored two op-ed pieces in the Oregonian and Register Guard that lay out my reservations of a cap-and-trade system, followed by my speech at the Portland City Club. You can view these at the link below or by typing the text of the link into your internet browser: http://www.defazio.house.gov/index.php?option=content&task=view&id=477

I attempted to protect energy consumers from Wall Street speculators by offering an amendment to keep them out of the carbon market created by H.R. 2454. My amendment was denied any consideration. I fear exotic Wall Street financial gimmicks, similar to those employed by AIG that brought our economy to its knees last year, will be used again in the burgeoning carbon market. Consider that this bill would allow AIG to create carbon offset derivatives futures tranched into collateralized debt obligations insured by credit default swaps.  Such financial instruments mimic the very same actions that drove AIG into failure and led to the $173.4 billion federal bailout of AIG. We cannot subject our economy to another unregulated Wall Street bubble.

Finally, it is essential to evaluate any legislative proposal by its economic effects on the Pacific Northwest.  Unfortunately, this bill disadvantages the Pacific Northwest and unfairly punishes our region’s low carbon emissions footprint.  The Pacific Northwest is blessed with low costzero emission hydroelectric generation.  To my dismay, a provision was added just days before the vote that would redirect the CO2 allocations from thePacific Northwest to coal plants in the Midwest to protect their ratepayers.

There’s no doubt that Congress needs to take bold new steps to reduce the emission of harmful greenhouse gases, but we must also guarantee that the method chosen is not subject to manipulation, doesn’t discourage investment in new energy technologies, and isn’t a burden on the consumer. Unfortunately, I believed H.R. 2454 fell significantly short of these goals and I opposed the bill on the House floor.

Thanks again for contacting me. Please keep in touch.


Rep. Peter DeFazio
Fourth District, OREGON


1 Response to “DeFazio’s Reply”

  1. 1 B-Ran
    July 8, 2009 at 3:34 pm

    I saw Pete eating at Prince Puckler’s about a week ago…

    Anywho, see my 912lane post on this same topic. I’m glad Pete is gonna go ahead and not vote for this unconstitutional corporate welfare scheme, but I wish it were because these sorts of legislation are unconstitutional.

    Damn you, Necessary and Proper clause, for being so confusing to so many people. This goes doubly for the General Welfare clause.

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