Cap and trade has never seemed like a strategy for reducing carbon; just another way for swindlers to game a new market. Direct taxes or "surcharges" on carbon dioxide sources, at the pump, at the well head, are at minimum give more direct and measurable economic incentives for reducing use. No smoke. No mirrors. Don At 09:18 AM 7/14/2007, Eric Brooks wrote:
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.
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