Recent Congressional testimony from Robert Greenstein, of the non-profit Center on Budget and Policy Priorities, in support of cap and trade illustrates how problematic the approach is, by accurately describing how it is supposed to work (here in PDF):

Fighting global warming requires policies that significantly restrict greenhouse gas emissions. The most cost-effective ways to do that are to tax emissions directly or to put in place a “cap-and-trade” system. Either one will significantly raise the price of fossil-fuel energy products — from home energy and gasoline to food and other goods and services with significant energy inputs. Those higher prices create incentives for energy efficiency and the development and increased use of clean energy sources. But they will also put a squeeze on consumers’ budgets, and low- and moderate income consumers will feel the squeeze most acutely.

Fortunately, climate change policies can be designed in a way that preserves the incentives from higher prices to change the way that we produce and consume energy, while also offsetting the effect on consumer budgets of those higher prices. Well-designed climate policies will generate substantial revenue that can be used to offset the impact of higher prices on the budgets of the most vulnerable households, to cushion the impact substantially for many other households, and to meet other legitimate needs such as expanded research on alternative energy sources.

Congressman Henry Waxman (D-CA) also sees increasing the costs of energy as the key motivation for cap and trade (h/t MS):

If we raise the price of energy, which will happen if we’re reducing the amount of carbon emissions, and industries have to figure out how to live in a carbon-constrained environment, they are going to have to figure it out because it’s in their profitable interest to figure it out.

Mr. Waxman might want to stick to the flawed economics:

We’re seeing the reality of a lot of the North Pole starting to evaporate, and we could get to a tipping point. Because if it evaporates to a certain point – they have lanes now where ships can go that couldn’t ever sail through before. And if it gets to a point where it evaporates too much, there’s a lot of tundra that’s being held down by that ice cap.