All the kids are waiting to see exactly what Obama's going to do on Monday to regulate existing power plant CO2 emissions. The hope is that it would be fairly substantial regulation, a 20% cut by 2020, possibly modeled on the Natural Resources Defense Council proposal we've discussed before. The proposal pushes states towards action, with more coal-dependent states having to do more but not having to get the same result as the less coal-dependent ones, and lots of flexibility for reaching results, including cap-and-trade.
My main point is that Monday will change the status quo. Until then we've referred to pricing carbon, either via a tax or cap-and-trade, as the conservative/free market approach to solving climate change. Next week it will also be more free-market oriented than sitting on your hands, because one of the status quo options under the new rules will be lots of economic regulation instead. The states may choose to operate cap-and-trade programs anyway, but those programs will likely only be part of the state response, just like it is here in California.
A free market conservative will be able to argue that a fairly comprehensive price on carbon that replaces regulation is more capitalist than inaction. A populist conservative could even argue that passing all of the money back to individuals shrinks government and the power of big businesses. (I don't agree with all this, btw, but it's a feasible position from that perspective.) They don't even have to believe in climate reality, this argument stands as a free-market argument on its own. The analogy would be the Paul Ryan approach to Medicare in 2012, which basically argued for converting it to Obamacare. They wanted to do it because it was more conservative than the status quo.
Whether conservatives will make the same realization this time around is another question. My guess is that some will at the state level but few will at the federal level.
I've been thinking a lot about prison reform efforts sweeping through conservative states. Back in the early 90s if you asked which was the more firmly conservative position - that climate change didn't require action or that society needed to get consistently tougher on crime - it was the latter. It may not be easy to get conservatives to move on this issue as well, but we need to try.
Other relevant point is the Chamber of Commerce's "sky is falling" economic analysis of regulation. Same thing happened several years ago when the Western States Petroleum Association produced a "sky is falling" economic analysis of California's climate legislation, AB 32. So far, the sky's still up there and California's doing reasonably well. That one will be worth revisiting, maybe now and definitely in a few years.