Then there’s Russia, which hasn’t joined Europe’s cap-and-trade program but would enjoy a huge competitive advantage if it did. Each country’s cap is based on the Kyoto Protocol’s recommendations. Kyoto calls for Russia to cut emissions to 1990 levels—but the country’s economic decline means that it already emits far less carbon now than it did then. The likely result: tens of billions of dollars’ worth of extra emissions credits to trade in Europe’s market. “Russia is the Saudi Arabia of carbon,” a spokesman for Gazprom, the nation’s natural-gas company, told the New York Times in April. And Russia’s abundance of credits would let it influence prices by affecting supply, just as the Saudis try to do with oil prices. In a global carbon market like that envisioned by many multinational companies and trading firms, Russia’s decisions on how many carbon credits to release into the market would help determine how much a New York power company paid for its greenhouse-gas allowances. A global carbon market, in other words, could make the price of American coal-fired electricity dependent on global forces, just as oil prices are.

American companies and consumers would also feel the squeeze of the phenomenon called NIMBY: “Not in my backyard!” The feds’ Energy Information Administration assumes that American power companies would respond to the new cost of carbon by readily switching from dirty coal to cleaner technologies such as nuclear, natural gas, and biomass. It predicts that the nation’s power producers would boost nuclear generation by 50 percent over the next 23 years—five times the growth expected without a cap—and increase natural-gas output 20 percent above the level expected without a cap. But this happy scenario requires politicians to let power companies build new plants. Often, the very same pols backing cap and trade don’t want any company to build property-value-destroying, voter-repellent power plants in their constituents’ backyards.

Nuclear energy, for instance, is already an established way to produce mass-scale power for a reasonable cost. But no company has started up a nuclear plant in America in three decades, partly because fierce local and state government opposition makes it nearly impossible. In New York, Governor Eliot Spitzer wants to cap carbon emissions, even though the state’s power prices are already 57 percent above the national average. But at the same time, he hopes to close the downstate region’s only operating nuclear plant, Westchester County’s Indian Point, “as soon as replacement power is available.” If New York caps emissions and encourages power companies to build more nuclear plants, power prices will go up to pay for the new construction. But if New York caps emissions and effectively caps new generation by discouraging power companies from building nuclear plants, prices will go way up. Financiers also hesitate to back new nuclear plants, because Washington opponents—these days led by Nevada Democrat and Senate majority leader Harry Reid—have stalled on building a permanent fuel-waste storage site in a remote area of Nevada.

Natural gas is a second cleaner alternative to coal. But natural-gas power plants, even if companies get to build them, need, well, natural gas, and our domestic production falls short of growing demand. To import gas, we’d have to build more natural-gas terminals on our coastlines—where, citizens fear, terrorists might blow them up. Earlier this year, Chevron canceled plans to build a terminal off the California coast, after years of resistance; on the East Coast, politicians on Long Island and in Rhode Island have stubbornly opposed terminals.

Wind meets with NIMBY resistance, too. Last year, Massachusetts senator Ted Kennedy maneuvered to block the proposed Cape Wind power farm off Hyannis, saying that it would hurt navigation and tourism. Consultants studying an upstate New York project found that windmills had killed hundreds of bats and migrating birds over a period of five months.

Many cap-and-trade supporters, joined by coal-mining interests, point to newfangled “clean” coal technology as a catchall solution, claiming that it would allow us to exploit our coal supplies while lowering emissions. Clean coal could replace regular old dirty coal to make electricity, it’s true, but it would involve either gasifying the coal instead of pulverizing it, so that it burned more cleanly; or capturing and storing carbon emissions from the plant, most likely underground, so that they didn’t escape into the atmosphere; or both.

The technology and expense of such new approaches are uncertain. Michael Rencheck, senior vice president of engineering at American Electric Power, supports a cap-and-trade program but estimates that the cost of producing electricity at the first type of cleaner-coal plant would be at least 20 percent higher than at a conventional one. Capturing and storing the carbon, Rencheck believes, would cost 60 to 70 percent more than old-fashioned coal generation. If and when the technology works, the price will fall, but that could be decades away.

The political and legal hurdles to making coal plants cleaner might dwarf the technical issues, says James Liles, a regulatory advisor with the Milbank, Tweed law firm who also supports cap and trade. While it’s quite possible, he explains, for power-plant operators to lay underground pipelines to depleted natural-gas fields, where they could store carbon emissions, such an undertaking would cost tens of billions of dollars and involve heavy construction work near hundreds of power plants, “many located in densely populated areas far away from any fields.” Because of inevitable state and local opposition, property-rights rows at now-dormant gas fields, and investor worries about technical glitches and legal liability, it’s likely that the feds would need to coordinate, and perhaps financially guarantee, the first few carbon-storage projects.

The biggest problem with cap and trade, however, is that it collides with the reality of global competition. We live not in a world of united nations, where the environment comes first, but in a cutthroat competitive economy, where small changes in certain prices can determine, say, whether a businessman keeps his manufacturing plant in upstate New York or places his orders instead with a factory in China. Developing nations won’t voluntarily give up a major competitive advantage—cheaper power—should we hand it to them. Can what’s left of New York’s industry, for example, stomach a 10 percent or greater increase in the price of power, without sending more jobs offshore?

Even if we decide to hurt ourselves economically to save the world, helping China and India and other less developed countries become more energy-efficient won’t reduce the planet’s global-warming emissions anyway. Over the past 25 years, for instance, because China has been growing and modernizing its economy, it has actually decreased its carbon inefficiency by nearly two-thirds. But as China’s corporations and citizens grow richer, they use more carbon even as they get more efficient, using the profits from their newfound productivity to buy energy-gobbling automobiles and dishwashers. (As the Manhattan Institute’s Peter Huber explains, Americans similarly take advantage of higher energy efficiency by using more electricity to do once-unheard-of new things, such as charging cell phones.)

If America’s politicians and corporate leaders truly believe that much of the world will suffer irrevocable damage from climate change within the next century, then obviously we should try to stop it. But the first step shouldn’t be a feel-good cap-and-trade regime. Federal, state, and local government should instead work together to remove all obstacles that prevent private companies from building new nuclear power plants, since it’s foolish not to take immediate advantage of a proven, cost-competitive alternative to dirty coal.

After taking that obvious step, pols and business leaders should do a gut check. Are they so certain of the catastrophic effects of climate change that they would support a straightforward emissions tax, rather than a carbon cap-and-trade program that (deceptively) seems so easy? After all, strip away the rhetoric about cap and trade, and it would have the same effect as a tonnage tax on carbon emissions: making such emissions more expensive; discouraging carbon-intensive power generation; and allowing the market to decide which environmentally friendlier technologies—solar, wind, what have you—would be competitive enough to take its place.

The pols and business leaders could suggest that America gradually impose such a tax, one that’s high enough within a decade to encourage industries and consumers to switch permanently to cleaner technology. A tax would mean higher power prices, too, but at least it wouldn’t mean directly subsidizing competitors abroad. And the feds could use the tax’s revenue to reduce taxes elsewhere in the economy—perhaps cutting dividend and capital-gains taxes further, to encourage the massive private investment needed to build the next generation of power generators. Nor would a tax create a new multibillion-dollar global commodity whose value could depend on political manipulation in dark corners of the world.

If it’s true that a consensus about global warming really exists, not just in press releases and on op-ed pages but in the back rooms of power, too, the politicians and the business leaders wouldn’t be afraid to suggest such a tax. They would insist on it.

Originally appeared in City Journal