The List: McCain’s 10 Worst Ideas

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Backing Cap-and-Trade Without a 100 Percent Auction

What he said: “We will cap emissions according to specific goals, measuring progress by reference to past carbon emissions. … Over time, an increasing fraction of permits for emissions could be supplied by auction, yielding federal revenues that can be put to good use.” —Speech in Portland, Ore., May 12, 2008

Why it’s a bad idea: McCain’s gotten credit for supporting a cap-and-trade system, but his specific proposal is pretty weak. Cap-and-trade systems work by putting a ceiling on carbon emissions, and then allocating permits that give companies the right to pollute a given amount. From an environmental standpoint, it doesn’t much matter how you initially distribute the permits, as long as the cap is stringent enough. But most economists think that, unless you first auction these off in a transparent process, you’re basically enabling a massive corporate giveaway, raising the likelihood that well-connected corporations or industries will get sweetheart deals, and failing to capture revenue that can pay for other priorities.