Waxman-Markey, the 2009 Cap-and-Trade Bill That Passed the House and Died

The vote was held on a Friday evening, June 26, 2009, and until the end nobody on the House floor was quite sure how it would come out. Earlier that day the House minority leader, John Boehner, had used the custom that lets party leaders speak as long as they like to hold the floor for about an hour, reading from a lengthy amendment that had been added to the bill in the early morning hours and demanding to know what was in it. When the tally finally closed, the American Clean Energy and Security Act had passed 219 to 212. It was the first time either chamber of Congress had approved a national cap on the gases that cause climate change. It would also be the last time for more than a decade that a serious carbon price came anywhere near becoming law. The story of how it died, and of what the people who watched it die did next, is the backstory of the largest climate law the country ever passed.

In short: In 2009 the House narrowly passed a cap-and-trade bill written by Henry Waxman and Ed Markey. The Senate never voted on it, Democrats lost the House in 2010, and the lesson its authors' successors took away was to pay for clean energy with tax credits instead of pricing carbon. That lesson produced the 2022 climate law, along with some new weaknesses of its own.

What cap-and-trade was supposed to do

Cap-and-trade sounds technical, but the idea is simple. The government sets a ceiling on total emissions from the covered parts of the economy and issues a limited number of permits, each allowing a ton of pollution. Companies that cut their emissions cheaply can sell spare permits to companies for whom cutting is expensive. The cap falls every year, so total pollution falls, and the market finds the cheapest ways to get there.

It was not a left-wing idea. Its most famous American success came from a Republican president. The Clean Air Act amendments that George H. W. Bush signed in 1990 created a cap-and-trade program for sulfur dioxide, the pollutant behind acid rain. Power plants cut emissions faster and more cheaply than many industry forecasts had predicted. Economists across the spectrum held it up as proof that markets could clean the air. By the mid-2000s, prominent Republicans, including Senator John McCain, had sponsored cap-and-trade bills for carbon. A McCain-Lieberman climate bill got a Senate vote in 2003 and failed, 43 to 55, but it showed that the idea had bipartisan sponsors.

By 2009 the political stars seemed aligned. Democrats held the White House, a large House majority and, for a stretch that year, sixty Senate seats. Barack Obama had campaigned on a cap-and-trade system. The Supreme Court had ruled in Massachusetts v. EPA in 2007 that greenhouse gases count as air pollutants under the Clean Air Act, which meant the EPA could regulate them even if Congress did not act. Many in industry preferred a law they could help write to regulations they could not.

The bill and the bargains

Henry Waxman of California, who chaired the House Energy and Commerce Committee, and Ed Markey of Massachusetts wrote the bill that carried their names. Its cap aimed to cut covered emissions 17 percent below 2005 levels by 2020 and 83 percent by 2050. It also included a renewable electricity standard, energy efficiency rules and money for clean technology.

Getting it out of committee required a long series of deals. Representatives from coal and manufacturing states, many of them Democrats, worried about electricity prices and jobs. The answer was to give away a large share of the permits for free in the early years, especially to local electric utilities, which were supposed to pass the value on to their customers, and to energy-intensive industries exposed to foreign competition. The bill also allowed companies to meet part of their obligations through offsets, paying for emission cuts elsewhere, including in agriculture and forests, a provision that pulled in farm-state votes and drew criticism from environmental groups who doubted the cuts would be real.

Each concession bought votes and cost credibility. Environmental critics said the bill had been shot full of giveaways. Conservative critics said that, giveaways or not, it was a hidden tax on energy. The phrase "cap and tax" became the opposition's shorthand, and it was effective because it was not entirely wrong: if a carbon cap does its job, it raises the cost of burning fossil fuels, and some of that shows up in what people pay.

The final vote reflected the strain. Forty-four Democrats voted no, many from rural and industrial districts. Eight Republicans voted yes. Without those eight, the bill would have failed.

Why the Senate never voted

The bill went to the Senate and stayed there. The reasons are worth separating, because each one taught a different lesson.

The first was the filibuster. Passing a bill like this in the Senate required sixty votes to end debate. Even with sixty Democrats on paper, several of them came from coal, oil and farm states and were openly skeptical. That meant any climate bill needed some Republican support, and the Republicans who had once backed cap-and-trade were moving away from it under pressure from their own voters and from conservative groups that made opposition a litmus test.

The second was timing. Health care consumed the Senate's attention and political capital for most of 2009 and early 2010. By the time the Affordable Care Act passed in March 2010, the window was closing and members were thinking about the midterms.

The third was a collapse in the one bipartisan effort that had a chance. Senators John Kerry, a Democrat, Lindsey Graham, a Republican, and Joe Lieberman, an independent, spent months writing a Senate version. In April 2010 Graham withdrew, angry that Democratic leaders seemed ready to take up immigration first. Then, the same month, the Deepwater Horizon rig exploded in the Gulf of Mexico, killing eleven workers and setting off the largest marine oil spill in American history. The Kerry-Lieberman bill had included expanded offshore drilling as a concession to win votes; the spill made that concession toxic for some Democrats without winning over any Republicans.

In July 2010 the Senate majority leader, Harry Reid, announced that the Senate would not take up a comprehensive climate bill that year. There was no dramatic vote. It simply never came to the floor.

The bill nobody ran on

Then came the midterms. In November 2010 Democrats lost more than sixty House seats and their majority. Some of the Democrats who had voted for the bill from swing and coal-country districts were among those defeated, and their opponents had used the vote against them. It is easy to overstate how much one vote decided those races; the economy was the dominant issue, unemployment was high, and the health care law was also central to many campaigns. But the lesson most politicians took away was simple and durable: voting to raise energy prices, even in a good cause, could cost you your seat.

Here is the strongest version of the case for cap-and-trade, which deserves a hearing even after its defeat. A carbon price is the most efficient tool economists know for cutting emissions. It reaches every corner of the economy, rewards every kind of reduction, and raises revenue that can be returned to households. Plenty of economists still think a price is the right answer and that the failure was one of political salesmanship, not of policy design. Some proposals that came later, such as carbon fee-and-dividend plans, tried to fix the salesmanship by sending all the revenue back to people as checks.

The problem with this argument is not that it is wrong about efficiency. It is that the most efficient policy is useless if it cannot pass, and the costs of a carbon price are visible while its benefits are diffuse and delayed. Voters see higher prices at the pump next month; they do not see the drought that did not happen in 2060.

The detour through regulation

Between the bill's death and the next window, the Obama administration turned to the authority the Supreme Court had confirmed in 2007. If Congress would not cap carbon, the EPA could regulate it under the Clean Air Act, one source category at a time. The agency tightened fuel economy and greenhouse gas standards for cars and trucks in a deal with automakers and California. In 2015 it issued the Clean Power Plan, which set state-by-state targets for cutting carbon from existing power plants and let states meet them partly by shifting generation from coal to gas and renewables.

The plan never took effect. In February 2016 the Supreme Court, in an unusual move, put it on hold while the legal challenges played out, and the next administration repealed it. Years later, in West Virginia v. EPA in 2022, the Court held that the agency had lacked the authority to require that kind of generation shifting, invoking what it called the major questions doctrine: agencies need clear permission from Congress before making decisions of vast economic and political significance.

That ruling closed the loop on 2009. Regulation built on old statutes was always the fallback for a Congress that could not legislate, and the Court had now said the fallback had limits. Anyone who wanted large-scale climate policy would have to get it through Congress after all.

What the 2022 authors learned

When Democrats next had control of Congress and the White House, in 2021, the people writing climate policy had spent a decade studying 2009. Many of them had been there. The approach that produced the Inflation Reduction Act in 2022 reads almost point by point as a response.

Instead of sticks, carrots. Rather than putting a price on carbon, the 2022 law offered tax credits for clean electricity, electric vehicles, home efficiency upgrades, battery and solar manufacturing, and more. It raised nobody's energy bill directly. The costs fell on the federal budget rather than on consumers' monthly statements.

Instead of sixty votes, fifty. The 2022 law went through budget reconciliation, a process that cannot be filibustered but only allows provisions that mainly affect taxes and spending. That rule is part of why the law was built around tax credits: a cap-and-trade program would have been hard to fit through that door.

Instead of a deal with polluters, a deal with builders. Waxman-Markey had tried to buy the support of utilities and heavy industry with free permits. The 2022 law tried to create new constituencies by putting factories, jobs and investment into communities, many of them in Republican districts, and by tying larger tax credits to paying prevailing wages and hiring apprentices, which brought the building trades unions in.

Each of those choices had a cost. Tax credits are more expensive per ton of carbon avoided than a well-designed price, and they do nothing to make polluting more costly. Reconciliation bills can be undone by later reconciliation bills, which is exactly what happened to parts of the 2022 law in 2025. And a coalition built on new factories is only as strong as the factories' political patrons are willing to fight for it.

The states kept the idea alive

Cap-and-trade did not die everywhere. California's own program, created under a 2006 state law signed by Governor Arnold Schwarzenegger, a Republican, began putting a cap on emissions in 2013 and was later extended by the legislature with some Republican votes. In 2025 the state extended it again, renaming it a cap-and-invest program. A group of northeastern and mid-Atlantic states have run a regional cap-and-trade program for power plants since 2009, using the revenue for efficiency programs and bill assistance. Washington State launched its own economy-wide program, and in 2024 its voters rejected a ballot measure that would have repealed it.

Those programs have their critics, including environmental justice groups who argue that letting companies trade permits can leave pollution concentrated in the poor neighborhoods next to refineries and power plants. That is a real concern, and states have responded with varying degrees of seriousness. But the state programs show that pricing carbon is not politically impossible. It may simply be easier where voters already see the stakes and where the money is spent visibly at home.

What you can do

Waxman-Markey failed in the Senate, and the next big climate fight will be decided there and in the House. These are ways to be part of it.

• Track how your members vote on energy and climate. The congressional votes and bills page follows what passes and fails. The party unity scores show how often each Democrat sticks with the party on contested votes, which is exactly the kind of math that decided June 26, 2009.
• Call before the vote, not after. Members from swing districts weigh constituent calls more heavily than people assume. You can find your representative and senators and their phone numbers by entering your address.
• Learn the climate arguments your neighbors find convincing. The climate policy page gathers coverage of the fights over prices, credits, standards and permits from across the spectrum.
• Support state-level programs. If your state has a cap-and-invest program or is debating one, local environmental and labor groups often coordinate testimony and campaigns. The organizations directory lists them by state.

The 219 members who voted yes in 2009 did not get a law. They did get something: a lesson their party took twelve years to learn and turned into the biggest climate investment in American history. The next lesson is how to make it stick.