[Sustain] CO2 Cap & Trade?

[Eric Brooks]

Well, the idea is that you put a top limit or 'cap' on how much each
county/state/corporations can emit. Concurrently with that, you create a
market for trading reductions in CO2 emissions such that corporations
get 'credits' (which are worth real money) and sometimes (but not
always) corporations receive financial penalties or taxes for exceeding
limits. The idea is that you make reducing CO2 emissions desirable by
making it valuable.

Then, you set up a market in which the CO2 credits get turned into
electronic trading notes (a lot like stocks). So, one company, say, a
carpet maker, figures out ways to greatly reduce it emissions, and its
trading exchange issues that company a given amount of credits for free.
Then, another company, say, a cement manufacturer, knowing that it is
going to exceed its limits, buys the credits created by the carpet
company so that, on paper, the cement company has bought enough credits
to -not- exceed its limits; and so, it can therefore avoid emissions
penalties (if there are any) or the cost of installing pollution
controls (if their state requires any). Depending on the current or
future cost of pollution control requirements, and taxes and penalties
on fuel use or CO2 production, some companies may see the credits as
even more valuable and pay more for them than their set value, and this
makes the credits rise in value on the trading 'floor'.

Now, as we all know, from any quick glance at the stock market, and
especially at markets trading currency values, speculators over the last
many decades have developed incredibly clever and complex ways of making
money from trading even though they aren't creating any value or
production whatsoever. Add this to the fact that corporations have high
incentives to use tricks to pretend on paper that they are reducing
their emissions when they are not, that corporations will continue to
get laws passed to reduce pollution controls and penalties and even to
change the way CO2 trading systems work, and it is easy to see that such
cap and trade systems are doomed to failure.

Indeed, the cap and trade system adopted a few years ago in Europe is
already failing dismally. See
http://www.heartland.org/Article.cfm?artId=21202

cheers

Eric

Anne Garrison wrote:

I can't even figure out how this cap and trade business is supposed to
work.  Somebody told me that carbon offsetting
meant something fairly simple like paying to plant a tree in exchange
for some sort of excess energy use, but I can't even tell how
this is supposed to work.  If I'm around and anyone can enlighten me at
the next meeting, I'd appreciate it.  I know it's crap, and don't
much feel like sorting it out, but feel like I should.