New York Mayor Michael Bloomberg will soon address a lunch meeting of the U.S. Conference of Mayors' climate summit.

You can see more of what he plans to say in this earlier post. But how would his pollution tax work?

Bloomberg's plan is an alternative to the better-known cap-and-trade system to control pollution. Cap-and-trade sets limits on emissions that get tighter over time. Companies either have to stay below the limit or can essentially "buy credits" from others that would allow higher emissions. That system was created during the administration of George H.W. Bush, but today it is more popular among Democrats, including Rep. Jay Inslee. He said earlier this year:

The economic benefit of an American cap-and-trade system on greenhouse gas emissions will be to spur investment in new clean-energy technologies that could be exported to China and the entire globe. We can create high-wage jobs here by supplying green technologies to the world.

But Bloomberg in the advance text of his speech said that caps and trades are an indirect approach. He'd rather just charge a fee for pollution.

Cap-and-trade is an easier political sell because the costs are hidden — but they're still there. And the payoff is more uncertain.

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There are also logistical issues with cap-and-trade. The market for trading carbon credits will be much more complex and difficult to police than the market for the sulfur dioxide credits that eliminated acid rain. And there are political issues — because the system is subject to manipulation by elected officials who want to hand out exemptions to special interests. A cap-and-trade system will only work if all the credits are distributed from the start — and all industries are covered. But this begs the question: If all industries are going to be affected, and the worst polluters are going to pay more, why not simplify matters for companies by charging a direct pollution fee? It's like making one right turn instead of three left turns. You end up going in the same direction, but without going around in a circle first.

A direct charge would eliminate the uncertainty that companies would face in a cap-and-trade system. It would be easier to implement and enforce, it would prevent special interests from opening up loopholes and it would create an opportunity to cut taxes.

Bloomberg also will talk about linking the new pollution tax with a reduction in the federal employment tax. He didn't specifically include that in his proposal, but said it is a promising idea.

After all: Employment is good, pollution is bad. Why shouldn't we lower the cost of the good and raise the cost of the bad? Studies show that a pollution fee of $15 for every ton of greenhouse gas would allow us to return about $500 a year to the average taxpayer. And a charge on pollution would be less regressive than the payroll tax, because the more energy you consume, the more you would pay.

There is already reaction to Bloomberg's speech. Sightline, the former Northwest Environment Watch, has posted an interesting critique by senior researcher Eric de Place. He has what he admits is a wonky take on Bloomberg's criticism of cap-and-trade.

As far as I can tell, Bloomberg completely ignored the right way to do cap & trade, which starts with auctioning the credits, not giving them away for free.

This is what he says has been ignored by Bloomberg:

AUCTIONED CAP & TRADE — This is the best system, but Bloomberg's remarks seemed to ignore this possibility entirely. In this system, instead of passing out credits for free, the government would hold regularly scheduled auctions. The big advantages are: 1) The cap puts a firm limit on pollution and drives emissions down over time; 2) It raises revenue that can be used to invest in ghg reductions, or cushion consumer impacts, or both; 3) It activates the power of the market to seek out the cheapest and most efficient reductions first, and to prioritize; and 4) It tips the playing field away from big historic polluters and toward leaner and cleaner competitors. One of the potential drawbacks of this system is that it has emissions certainty, but price uncertainty. (It's the inverse problem of the carbon tax.) So there is some risk of price volatility. There are, however, a number of good ways to reduce volatility (such as banking, borrowing, trading system linkages, and so on). These tend to be treated as technical details of the auction system, but they're actually pretty fascinating.

But there's also excitement about someone of Bloomberg's stature speaking out about a way to control emissions. de Place calls the speech a bombshell and says someone else at Sightline will soon be writing about "Bloomberg's awesome framing" of the issue. (That post is now up here.)

MORE: Bloomberg is now delivering his speech. He said that mayors and some governors have taken action on global warming. But he says the federal government, Congress and the administration hasn't done anything meaningful. He laughed at pollution control measures that set goals far out in the future, like one bill that set new standards that have to be reached by 2050.

"Do you know how many people in Congress will be in office, much less alive, in 2050? If I ever saw ducking, that is the ultimate. ...

"There is no substitute for federal leadership. Leadership is not waiting for others to act, or bowing to special interests, or making policy by polling or political calculus. Leadership is about facing facts, making hard decisions and having the independence and courage to do the right thing, even when it's not easy or popular. ... We've all heard people say, "It's a great idea, but for the politics.

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"We've got to put progress over politics."

MORE: Is Bloomberg running for president? He knows the question will be asked. He said that on Halloween trick-or-treaters urged him to run for higher office.

"I should mention I was wearing a Steven Colbert mask at the time."

Jokes aside, Bloomberg sounds like an insurgent candidate running against the Washington establishment. He criticized subsidies for corn-based ethanol, which he said may be good agricultural policy, "but you can't argue that it's good for consumers or the environment." And at the same time, the government charges a tariff on sugar-based ethanol.

"Everyone knows that politically-driven policies are costing taxpayers billion while providing only marginal carbon reductions. ...

"We should demand of those running for office an explanation of explicitly what they will do."

11:26 a.m. - Clay Bennett announces he's filing to move the Sonics to Oklahoma City.

11:58 a.m. - City Council sends out news release declaring Nov. 5 J.P. Patches Day.

The honor recognizes the work of Julius Pierpont "JP" Patches', Mayor of the City Dump, and his alter ego Chris Wedes for the memorable lessons he taught generations of children growing up in Seattle.

Here are some excerpts from the prepared text of New York Mayor Michael Bloomberg's Seattle speech:

How do we do it? I think we need a strategy that embraces four basic principles, and I'd like to briefly outline them today. First, we need to increase investment in energy R & D. Right now, we're spending just one-third of what we were in the 1970s. If we really want to be able to manufacture competitively priced biofuel and solar power, if we really want to sequester the carbon dioxide released from coal, we have to be willing to make the commitments that will drive private capital to these projects — and right now, we're just not doing that.

Second, we have to stop setting tariffs and subsidies based on pork barrel politics. For instance, Congress is currently subsidizing corn-based ethanol at 50 cents a gallon — and you can argue that's good agricultural policy, but you can't argue that it's good for consumers or the environment. Because it isn't. Consumers pay more for food, and producing corn-based ethanol results in much more carbon dioxide than producing sugar-based ethanol. But are we subsidizing sugar-based ethanol? No! We're putting a 50-cent tariff on it. Ending that tariff makes all the sense in the world, but for the politics. Everyone knows that politically driven policies are costing taxpayers billions while providing only marginal carbon reductions — but we need leaders who will do something about it!

Third, we have to get serious about energy efficiency — and the best place to start is with our cars and trucks. In 1975, Congress passed a law requiring fuel efficiency standards to double over 10 years, from 12 miles a gallon to 24, with incremental targets that auto manufacturers were required to meet. But since 1985, Washington has been paralyzed by special interests. If the same incremental gains had been adopted for the last two decades, think of where we would be now! We'd all be saving money at the pump, we'd be producing less air pollution and greenhouse gas, Detroit would be in a stronger competitive position and the "Big Three" may not have lost so many more jobs. (Just yesterday, Chrysler announced another 12,000 job cuts.)

Those job losses hurt hard-working Americans, and we have to ask ourselves: Do we want even more middle-class factory workers to be handed pink slips and left to look for service jobs at half the wages? Because that's the direction we're heading in if we continue to fall further and further behind other countries in producing fuel-efficient vehicles. The current Senate energy bill would raise Corporate Average Fuel Economy (CAFE) standards from 27.5 to 35 miles per hour by 2020. That's nowhere near the leap we made from 1975 to 1985, and many foreign cars are already getting 35 miles to the gallon. Even so, U.S. automakers are trying to water down the Senate bill — and if Congress caves, you can bet the loudest cheers will be heard in Japan. Raising fuel efficiency standards is the best thing we could do for U.S. automakers — and it would've been done years ago, but for the politics.

Fourth and finally, we have to stop ignoring the laws of economics. As long as greenhouse gas pollution is free, it will be abundant. If we want to reduce it, there has to be a cost for producing it. The voluntary targets suggested by President Bush would be like voluntary speed limits — doomed to fail. If we're serious about putting the brakes on global warming, the question is not whether we should put a value on greenhouse gas pollution, but how we should do it. This is where the debate is moving, and I'd like to briefly touch on the pros and cons of the two approaches that are most often discussed: creating a cap-and-trade system, and a putting a price on carbon.

http://cityroom.blogs.nytimes.com/2007/11/02/bloomberg-calls-for-tax-on-carbon-emissions/index.html?hpI'm at the swanky Waterfront Seafood Grill on Pier 70. In the bar, in fact. But it's not a drinking lunch. I'm covering a noon speech by New York Mayor Michael Bloomberg as part of the 2007 Mayor's Climate Protection Summit. I knew I was at the right place because outside were a half-dozen government SUVs. Apparently it takes a lot of horsepower to fix global warming.

Bloomberg is expected to make a specific proposal during his speech, according to AP. He will call for national "pollution pricing" that would raise taxes for companies based on how much greenhouse gas they release into the atmosphere.

Bloomberg also was set to announce that he will travel to the Indonesian island of Bali next month to be a guest participant at the United Nations climate conference, where nations will start discussing a replacement for the Kyoto Treaty. It aims to cut greenhouse gas emissions and expires in 2012.

According to a copy of his prepared remarks for the Seattle gathering, Bloomberg's pollution tax plan envisions a fee of $15 for every ton of greenhouse gas. It would be "revenue-neutral," meaning that the proposal by the Democrat-turned-Republican-turned-independent includes a tax cut that would return $500 a year to the average taxpayer.

Bloomberg is still being talked about as a possible independent presidential candidate. He'll meet with reporters afterwards and I'm sure that question will be asked.

The New York Times has the full text of Boomberg's speech at the bottom of this story.

After more than a week of worrying about Republican Party money being pumped into Dan Satterberg's campaign, Democrat Bill Sherman is getting help from state Democrats.

The Democratic Central Committee reported that it donated $30,000 to Sherman Tuesday. Sherman spokesman Sandeep Kaushik said the campaign has not received the check yet, but is expecting it today.

Kaushik said this morning that the Sherman campaign has been "raising alarm bells" with state Democratic Party officials about the GOP money Satterberg was collecting.

Satterberg continues to get more of that. The state Republican Party gave him $38,274 Thursday, according to reports his campaign filed with the PDC. Satterberg — who says he thinks his office should be non-partisan — has gotten more than $45,000 from the state party and $17,500 from the King County Republican Party. The party has also paid for mailings for Satterberg.

The 34th District Democrats have chosen Sharon Nelson as their first choice to replace Rep. Joe McDermott, who has moved up to the Senate. The district met last night and Nelson won the top spot over Toni Lysen and Greg Doss, whose names will be forwarded to the King County Council as second and third choices for the appointment.

Nelson won the vote easily, according to Josh Feit's account. Nelson is an aide to County Councilman Dow Constantine. A Maury Island resident, she has been active in the ongoing effort to stop expansion of gravel mining on the island. She worked with former Sen. Erik Poulsen last session to try to get the Legislature to stop the expansion. She says in a statement on the 34th Dems Web site:

She saw, during the session, that our super majority of Democrats were not always progressive on the Maury Island issue and other issues.

On a side note, I was looking at Nelson's candidate questionnaire. The candidates were asked:

4. Have you ever supported or given money to a candidate from another party in a partisan race? If so, to whom and why?

Nelson's answer:

Yes, I gave $100 to Jane Hague after Richard Pope filed for the County Council position. Pope is not a Democrat.

I wonder how many other Democrats have done the same? Are you Democrats out there planning on voting for Hague over Pope?

(Thanks to the 34 District Democrats for making it easy to follow the news of the appointments and updating their Web site with lots of good info on the candidate.)