In short, good things happened when we harnessed the tremendous power of the market to solve environmental problems. Today, the biggest and most pressing of those problems – identified, once again, by a massive amount of scientific research and evidence over several decades – is not acid rain, but global warming. And the proposed solution, once again, is the conservative, market-based "cap-and-trade" system. Strangely, however, it's conservative, market-based Republicans who have morphed into the loudest and most vociferous opponents of "cap-and-trade," while Democrats have become its biggest proponents.
Even stranger, as Climate Progress points out, many Republicans are now opposing – even "demagoguing" – against an idea they once supported! A short list includes: Sen. Lisa Murkowski (R-AK), who once said she supported cap-and-trade because she believed "it offers the opportunity to reduce carbon, at the least cost to society;" Sen. Scott Brown (R-MA), who once bragged that voting for "cap-and-trade" in Massachusetts was an "important step … towards improving our environment;" Sen. John McCain (R-AZ), who once asserted that cap-and-trade "will send a signal that will be heard and welcomed all across the American economy;" and Sen. Lindsey Graham (R-SC), who used to believe that we should "set emission standards and let the best technology win." Actually, as Steve Benen at Washington Monthly points out, the McCain-Palin official website in 2008 promised that a McCain administration would "establish…a cap-and-trade system that would reduce greenhouse gas emissions."
My, how times have changed in less than 2 years.
The point of all this is simple. Cap-and-trade is not some dastardly scheme to destroy the U.S. economy. Cap-and-trade is not radical, either. In fact, cap-and-trade is a tried, true, tested and proven, market-based approach to reducing greenhouse gas emissions at the lowest possible cost. It worked with acid rain, far faster and cheaper than anyone predicted. Why would it be any different with carbon dioxide than sulfur dioxide? And why would Republicans oppose their own idea, after watching it produce one of the biggest environmental victories in U.S. history, on the gravest environmental threat facing our country and our planet? Even more, why would Republicans oppose an idea that — even if you put aside the issue of global warming — is still imperative – for urgent economic (e.g., sending $400 billion overseas every year to pay for imported oil) and national security (sending that $400 billion to a lot of countries that aren't our friends, are building nuclear weapons programs, etc.) reasons?
It's hard to think of any good reasons, how about some bad ones? Because, in the end, that's about all the cap-and-trade naysayers have left.
Wasn’t last year’s health care reform largely premised on ideas from the Heritage Foundation?
Both of these things come from an era when conservatives had ideas, and good ones at that. I don’t think there will be similar examples in 2030.
posted a video from 1958 all about carbon trading causing global warming. 1958 however was before Nobel Peace Prizes for escalating illegal wars, the island of Guam tipping over or the strange death of cold fusion MIT researchers.
If we could stop global warming for $3 Billion … or $25 billion, I’d take that deal. But we could spend ten times that amount with carbon pricing schemes and it would still do nothing. Until the technology is there (as it was for SO2 emissions), brute force carbon rationing is a waste of resources.
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p>And since this is a conservative idea, you might want to
listen to your right-wing brothers before putting too much faith in the market. It’s their opinion that price signals are not good at stimulating rapid technological development (that’s right, market failure!). Investing in R&D is a more promising way to go… unless you want to be the party of energy rationing.
It’s clear that you don’t understand how cap and trade works. It isn’t a carbon pricing scheme per se — the price of carbon is an artifact of limiting the total amount of carbon emitted. The cost of substitute products may or may not cost $3B or $25B or ten times $25B… but to claim that “it would still do nothing” is flat out wrong.
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p>The technology wasn’t there for SO2 — at least, not at a price industry was happy about. Once there was a clear demand for the SO2 reduction/substitution technology, folks worked hard on it. Demand drove price down. Where different production processes could be put in place effectively, they were. As for carbon, the technology is here, now. Put in cap and trade, and inefficient uses of carbon will be phased out with market forces, instead of the so-called picking of winners and losers which has become a GOP talking point as well. Because renewable energy often has a different capital/variable cost structure than fossil, it’s not at all clear that the push will lead to higher prices on energy at all.
Of course cap-and-trade puts a price on carbon, that’s the whole point. (If you want to emit more CO2 than allowed, you have to pay the market price for more credits.) A carbon tax does this as well. These are the “carbon pricing schemes” I was referring to. They both establish a price for emitting CO2 and let the “invisible hand” find the cheapest way to reduce those emissions.
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p>Yes, you would get a measurable reduction in the rate of global warming if you’re prepared to spend enough on this kind of direct carbon reduction. But in spite of its market-friendly mechanism, carbon pricing is the most inefficient approach. For every dollar spent on carbon pricing schemes, the value of climate damage mitigated could be as low as $0.02, perilously close to zero. Technology investment can mitigate $11 of climate damage. If we want to actually stop global warming, we need to look at the least costly solutions.
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p>Here are some folks who have researched the cost/effectiveness of various mitigation strategies:
http://fixtheclimate.com/
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p>We have options here, but if you Dems want to think the invisible hand will just tuck you in at night, go right ahead. đŸ˜‰
Cap-and-trade’s putting a price on carbon is a side effect. The whole point is to limit how much carbon can be emitted in total. If the limit is binding (and in this case, it would be), folks can trade credits for cash. If Cap-and-trade were rolled out tomorrow and stomv discovered how to run power plants and autos on kitty purrs in 2011, the price of carbon would go to $0, and that would be A-OK with the folks who implemented cap-and-trade, because the price is an artifact, a side effect. The purpose is to put an upper bound on the amount of carbon emitted.
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p>As for your website, two comments:
1. There’s more social networking than information on the front page, that’s a bad sign.
2. There’s something very wrong with a list which thinks that atmospheric engineering, technology led policy response (whatever that is), atmospheric engineering, carbon storage, and planning for adaption are the top five best responses.
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p>The elegance of cap-and-trade is that once an entity has to reduce their carbon emissions, they’ll make the technology investments themselves. The invisible hand did a remarkably good job in cutting out CFCs; why you think it wouldn’t do the same thing with carbon you’ve yet to explain.
“Cap-and-trade’s putting a price on carbon is a side effect.”
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p>Not so – carbon pricing is a central design feature. The much touted free market features of cap-and-trade depend on this.
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p>I’ve attempted to explain why the free market’s “invisible hand” fails:
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p>1) the technology is not yet good enough
2) the free market can not stimulate the amount of R&D necessary to improve technology quickly enough
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p>My source has researched free market CO2 reduction strategies and found them to be among the least cost efficient ways to deal with global warming… the numbers I cite speak for themselves.
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p>This research is the only comprehensive cost-benefit analysis of strategies to fight global warming that I’ve found. It also happens to be from a center-right think tank. I didn’t expect to be told on bluemassgroup that the right wing is underestimating the powers of the free market!
The price is very much a side effect. Do this mental exercise with me:
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p>2010: 200 lbs/yr of FOO are emitted.
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p>2011: permits to emit 100 lbs/yr of FOO are issued at $20/lb. As a result, 100 lbs/yr of FOO are issued. The defacto value of a permit: $20/lb.
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p>2012: manufacturing technology changes… and instead of 100 lbs/yr of FOO emitted by those companies, they only emit 60 lbs/yr. They sell their extra permits to a different company, who pays less than $20/yr since, by definition if it were worth $20/lb that company would have bid on ’em in
2011. Say, pays $15/lb.
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p>2013: materials technology changes… and those companies which only emit 60 lbs now only emit 30 lbs. Oh, and the company emitting the other 40 now only emits 10 lbs. That’s a cut of another 60 lbs/yr. So something fills the gap, right? Just like 2012. Sure. Now there are 3 industries: Ind_A emits 30 lbs, Ind_B 10, and Ind_C 60. Still at 100 lbs/yr. The price that Ind_C paid to get the permits went down again though… since if they were worth more than $15/lb to Ind_C, they’d have outbid Ind_B in 2012.
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p>2014: chemistry technology changes… and Ind_C now only emits 30 lbs/yr instead of 60 lbs. So, something else fills the gap, right? Maybe not. We’ve now gone through all of the original 200 lbs/yr of emissions. If there was a demand for more products requiring these emissions, it would have existed in 2010. That it didn’t suggests that nothing will fill the gap.
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p>Emissions are now 70 lbs/yr and the price of a permit is $0, since nobody wants to emit any more than 70 lbs/yr.
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p>Cap and Trade exists to limit the amount of emissions. If there is an economic incentive to emit more than that, a non-zero price follows. If there is not an economic incentive — because technology and changes in demand have resulted in there being no economic value to emitting more than the cap — than the price is $0. The point is not to have a price, the point is to have a cap. Using a price is simply a tool to ensure that whichever process is economically more efficient gets to do the emitting, but it’s entirely irrelevant to the function of cap and trade. The function is the cap; the trade (at a price greater than $0) is a side effect. The price greater than $0 is not an essential component for effectiveness.
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p>Nonsense. We’ve got the auto technology to cut our gasoline-carbon emissions in half, tomorrow. That’s 1/6th of our total emissions. Since the average car lifetime is 7 years, let’s say we get there in 10 years for convenience.
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p>We’ve got the power plant technology and fuel source to switch the all of the 50% we generate from coal over to natural gas, wind, solar, and biomass within 5-10 years. Even if that was entirely natural gas, it would still cut our overall emissions by 1/3×1/2×1/3.
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p>We use 1/3 of our energy in heating and cooling our buildings. There’s no question that we could shave that by 20% with energy efficiency upgrades. So that’s 1/3×1/5 = 1/15. Let’s say that takes 10 years.
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p>In 10 years we’ve cut our carbon emission by 1/6 + 1/12 + 1/15 = 19/60 = 32%. With today’s technology.
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p>This myth that the technology doesn’t exist is just that, a myth. Notice that none of this involved demand reduction — just getting more results from the same energy input, or using an energy input with more BTUs/kWh. The problem is that coal and oil are relatively cheap, so folks continue using them instead of switching to cleaner fuels or switching variable costs to capital costs to avoid the consumption in the first place.
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p>Cap and trade isn’t the most efficient method — stomv as glorious dictator is the most efficient method. But, that ain’t going to happen, nor will lots of the other proposals out there. Cap and trade is elegant because it’s remarkably non-invasive. Keep doing what you’d like to do, but use the price of a carbon permit as an incentive to behave differently, where it makes sense to do so. As time goes on, the price of carbon emitting goes down, until eventually the permits are worth $0 because we’re emitting less than we’re allocated.
Ok, so you want to “use the price of a carbon permit as an incentive to behave differently”… but “The price greater than $0 is not an essential component for effectiveness.” With respect, I don’t see what useful point you’re trying to make.
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p>If my “source stinks” I’d love to see other studies of the relative effectiveness of various strategies to combat global warming. This is all I’ve found.
If the desire to emit carbon exceeds the limit, a price sorts it out. If the desire to emit is below the limit, the price is $0. The important part is the limit — the pricing scheme is a side effect. A different way to do it is to set a limit, give away the permits for free, and declare that they may never be bought nor sold. The price is now $0, and you’ve got your limit. The trade portion is used to allow the most efficient allocation of emission permits if there’s financial value to emitting in excess of the limit. It’s not an essential component of the “cap” portion.
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p>As for “source stinks” — a number of Nobel prize winning economists have commented on the effectiveness of cap-and-trade as a system, in general and with specific focus on carbon emissions. If you haven’t been able to find them, you’re not using teh googlez very well.
You say that:
“The trade portion” is “not an essential component of the “cap” portion.”
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p>But it is an essential part of cap-and-trade. You seemed to be arguing this point, but I guess not.
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p>Have a wonderful Fourth.
If there’s a surplus of permits, the trade value becomes $0. Trade is fine, price is non-essential… a side effect.
… stuck beneath the reductio in your absurdum…
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p>Even the fiercest proponents of ‘cap-n-trade’ refuse the intellectually slovenly approach of terming it a method of “stopping global warming” (at any price). And no one involved in the fight to curb SO2 emmisions thought that a cap-n-trade system was a wholesale cure. We’re doing calculus here, not algebra: rate of growth slowdown is a far far cry from a wholesale variable substitution.
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p>The resource in question here isn’t carbon, but the storage capacity of the atmosphere. (That is, after all, the simplest definition of what we’re doing here… storing carbon in the atmosphere.) And any amount of money spent on immediate reduction (the ‘cap’ part…d’ya see?) of carbon stored atmospherically is, at this point, money well spent. Could we spend better… well, yeah… If we had realized, way back at the dawn of the industrial revolution, that heedless and wholesale storage of ‘waste’ in the atmosphere was a fantastically dumb idea we’d be well ahead of the game by now.
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p>Now I’m certain that, were someone to suggest a ‘cap-n-trade’ system on spent fuel rods from nuclear reactors, you wouldn’t be so cavalier about the issue… you certainly wouldn’t A) let them be flung around heedlessly and 2) at no cost… Yet you are altogether willing to let tons and tons of carbon by-product be flung heedlessly into the atmosphere at no cost… Strange that…
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My understanding is that SO2 cap-and-trade succeeded in stopping the destructive effects of acid rain. You’re right, none of the cap-and-trade schemes being proposed is expected to actually stop global warming. The best we can do right now is to slow it down, at great cost. Our best approach is probably to invest in adapting to climate change (we might as well be ready, it’s going to happen anyway) and develop carbon-free technologies so that we eventually have a chance to stop global warming.
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p>On your comparison of CO2 emissions with “spent fuel rods from nuclear reactors” — We emit CO2 into the atmosphere because it’s an unavoidable product of combustion. If CO2 were easily containable in solid rods, we’d just go bury them in the woods (carbon is fairly harmless)… and have a giant party, because we wouldn’t have to worry about global warming anymore.
Nobel Prize winner Ronald Coase (of Coase Theorem fame) supports cap and trade. He was mentioned in the article you cited and was interviewed for an article in the NY Times earlier this year.
SO2 is a single product put out by a comparatively small number of industrial processes, primarily coal burning. Greenhouse gases aren’t just one gas-CO2 is by far the biggest one, but there’s methane from cows, nitrous oxide, HFCs, PFCs, and dozens of others, put out by thousands and thousands of different processes: coal burning, motor vehicles, industrial chemistry, cement making, cattle ranching, deforestation. I think this system will either be so complex that its cost will force its repeal, or, more likely, simplified so much that it’s neutered.
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p>Also, are we planning to use offsets here? That is, letting companies pollute extra in the US because they preserved a forest overseas or something similar? I know the EU does, and I’m really skeptical of that idea. A lot of the offsets sound like getting rewarded for something that was going to happen anyway.
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p>And what about companies that import from polluting factories in China? Are we going to have a situation where companies shut down a factory in the US, get pollution credits because they had a license to pollute, sell the credits and open a new, even more polluting factory overseas? Is Walmart going to have to buy carbon credits to account for its imports? Somehow I doubt it.
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p>Now, I’m hoping somebody who knows more than I do is going to chime in and say, “don’t worry, all that’s been taken into consideration, and we’ve come up with an elegantly simple way to handle these problems.” I really am-I would love for this to work. But this whole scheme seems needlessly overcomplicated, all for the sake of having a “market-based approach.” We should just tax carbon and put the money into R&D into batteries, solar power, and geoengineering.
First of all, know that the US emits roughly 20-25% of the world’s carbon, so any change we can make is significant.
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p>Also, you’re right — chasing emissions at the source is tough. My instinct is to chase them further upstream. There’s about 300 million cars, but about 150,000 gas stations, and 150 refineries. Far easier to get compliance out of 150 refineries, no?
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p>It’s true that very energy intensive production — steel, electronics — will have a larger incentive to go to China with c&t. But much of our carbon emissions can’t be off-shored. Most of our electricity is consumed by homes, offices, and the life. Most of our oil consumption is for autos driving here. Most of our natural gas is for heating buildings here. You simply can’t offshore most of that… so c&t will have a direct impact on much of our carbon emissions.
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p>Not doing this because China hasn’t yet is the wrong approach IMO. Let’s follow Europe and roll it out, with tweaks to improve. Then we’ll lean on China to follow suit, then India. If we do it, China may well not… but if we don’t, China certainly won’t, and if both tUSA and China fail to act, we know we’ll be in bad shape.
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p>This is actually a reason to prefer cap and trade for carbon emissions even more than for SO2 emissions. We don’t know for sure which of those various industries will be able to reduce carbon outputs at the lowest cost. With cap and trade, we don’t have to figure that out. Whichever industries can do it for the lowest cost will do it. The industries where it is too expensive to reduce their carbon emissions will not be forced to.
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p>The primary difference between a carbon tax and cap and trade is how the price is determined. With cap and trade, the carbon tax price will be set at whatever level reduces CO2 emissions to a determined level. With a directly priced carbon tax, the tax will be set at whatever level politicians choose, which might be too high or too low. All the other issues concerning offsets, offshoring, and other ways of avoiding paying for the tax are identical in both cases. The second biggest difference is that cap and trade can be set up so that current polluters sell the pollution rights instead of the government, but it doesn’t have to be (and the same thing can be accomplished with a carbon tax by giving a credit to current polluters to offset the cost).
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p>The main disadvantage of cap and trade is that it is hard for businesses to plan, because nobody knows what the price of carbon emissions will be 5 years from now. That can be fixed by setting a maximum (and possibly a minimum) price for pollution permits. That way if the government tries to cut carbon emissions too quickly, the price will rise to the maximum level and more permits will be issued rather than forcing businesses to pay an unpredictably high price to continue operating. This moves it back towards a directly priced tax, but only in the case where the cuts turned out to be more expensive than what the economy could handle.
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p>Obviously exactly where the business is now in terms of their permits matters, but a few thoughts:
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p>1. If you own the permits now, you own them five years from now, right? So, unless there’s a built in depreciation mechanism (you get to emit 1% less per year, to ratchet down the emissions), if you want to keep emitting five years from now, buy ’em today.
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p>2. Financial products can help with this too. There’ll be a futures market, and there’ll be an options market. You could simply buy an option for 5 years from now with a strike price you like, thereby exchanging dollars now to mitigate the risk completely. This problem is not fundamentally different from building a factory which will export products — what will the exchange rate look like five years from now? Options trading allows the risk to be priced out, and it will work the same way for cap and trade.
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p>I think we have a different viewpoint on the underlying permit mechanism. My viewpoint is that the asset is life-long. You buy the right to emit 100 lbs CO_2-equiv per year, and that lives forever. You can sell it 4 years from now to Fred, who can sell it 3 days later to Sally, etc.* It sounds like you’re thinking about purchasing permits annually to emit. That’s quite a different system. If my understanding is how it works, then government can’t put a max or a min on the price — it’d be like gov’t saying IBM shares can only sell for $40-$100 each. It doesn’t make any sense. The thing to understand is that the price can never skyrocket, because there are always substitutes (solar, wind, biofuel, nat gas) which have lower emissions than oil & coal… if the price of an emissions share got too high, I’d simply replace my coal with natural gas, and the extra cost would be less than the required permit differential — so I’d sell the extra permits, go with natural gas, and therefore the price of permits would come down slightly. The elegance isn’t just that winners and losers aren’t chosen; the elegance is that the price can’t soar because there are energy sources which have zero carbon and are remarkably untapped.
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p> * Obviously, the permit is for a total of 100 lbs per year, so re-selling it 5 times in one year doesn’t allow for up to 500 lbs (100 each).
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p>Eh… no.
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p>First off, some cap-n-trade programs are completely voluntary. So not like a tax.
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p>Secondly, some systems ‘grant’ offsets at no price whatsoever (the EU ETS is one) and allow markets to trade amongst themselves.
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p>Thirdly, again as in the EU ETS, charges to the government are only made when you exceed your pollution targets. More in the nature of a fine, than a tax. The EU is considering auctioning emission permits but there are, likewise, many reasons why that, too, is so not like a tax.
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p>In still other systems, RGGI for example, the governmental involvement is more like a bank and clearinghouse. Auctions are the actual market and participants buy, sell or trade offsets with government holding ‘extra’ permits if you can’t a partner who’ll dance wit you.
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p>Bunk. Nobody knows what gas prices will be either. So what? Truckers keep on trucking, don’t they? I have no idea what, in 5 years, it will cost me to see a doctor. I do, however, still plan on seeing my doctor…
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p>Regardless of that, the pollution emitters don’t have to know the price of emissions, they just have to know the amount they are emitting. Then, in 5 years, they either buy more to cover the excess or sell if they’ve been able to bring their pollution down.
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p>Some systems, like RGGI for instance, have ‘price triggers’ that serve to keep price volatility in check.
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p>As compromises go, every possible deference toward energy producers in a ‘cap-n-trade’ system have been undertaken. So, I’m getting a little tired of hearing how beset upon they are…
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p>Forgive me if I ask for some particulars… You write as someone (like the fella above) sold on the idea that “cap-n-trade” is itself being sold as a panacea… an end-all fixit-up for the planet. Is that so?
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p>Cap-n-trade is not gonna fix the planet. Nobody is selling it as such. It is actually a compromise between an outright ban (which was suggested for SO2 at one point) and doing nothing. As a compromise it could, plausibly, be seen as a half-measure. No one, not even it’s most strident proponents, think that it will ‘cure’ the planet.
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p>It will, however, be a large component of one of the largest section of polluters and that is energy producers. If, as predicted by and large, we move even a small portion of our everyday vehicles to electric propulsion then we will have made a massive, and not necessarily linear, shift from millions of small polluters (cars) to hundreds of larger polluters (electricity generating power plants…).
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p>Offsets are the actual piece of paper that you ‘trade’. The absolute amount of offsets available is the ‘cap’ part. So offsets are the heart of the system. I’m not aware of specific instances in the EU of ‘letting them pollute more here because they preserve a forest overseas or something similar”? Perhaps you can elaborate… ?
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p>eh? Speaking strictly of energy producers there’s no known connection of the US Energy grid to any factory in China or elsewhere…(I guess other than Canada…) And, though I often stand in awe of the depravity of US capitalists, not even I think so low of them as to suspect that they’ll give up providing power to the US and go provide power to China solely for the ability to pollute more.
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p>For producers of goods and services, I’m not sure the cost of pollution is going to be the deciding factor.
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p>There is, also, growing evidence that China is aware of it’s own pollution problems and will be forced to take steps to curb emmissions on it’s own… So it’s not like China is the wild wild east where anybody can go and pollute for the sake of pollution.
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p>There’s also, at this point in time, a ‘happy coincidence’ (sic…) of new power plant construction, EPA regulation, grid infrastructure improvements and cap-n-trade implementations. Back in the early days of the Clean Air Act, existing coal fired plants were grandfathered in order to avoid the costly disruptions of retro-fitting them to Clean Air Act standards. This lead to a dearth of new coal fired plant constructions in favor of heavy and continuous modifications to the grandfathered plants in order to continue avoiding the cost of Clean Air Act implementations (despite evidence that implementations wouldn’t be as costly as feared… but we’re digressing…) To that end, we’ve been stretching our existing power plant infrastructure well past it’s usable shelf-life. New coal-fired plant constructions have ‘boomed’ (relatively speaking) in the past decade and, with upcoming implementation of a ‘smarter’ electrical grid it’s possible that we’ll leapfrog a couple generations of plant technology while simultaneously see a lowering in the power used by the grid to run the grid. In that situation, a cap-n-trade system could be adroitly used by power companies to cushion disruptive shocks that might occur and move them unto the next level.
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p>I doubt it too… but WalMart isn’t just stores, it’s also a couple of very large data centers spread across the country, each of which draws a lot of power and has onsite diesel generators for extended power-outages. So they may well, and rightly, be a part of the final system of cap-n-trade. It’s something they have to be thinking about, to be sure.
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p>Well, that’s not going to be me. But as far as I’m concerned the issues we’re discussing are less problematic, in and of themselves, then (compromise) approaches to far bigger problems that are absolutely required to be solved.
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p>We’re not doing this, in any way, just for the emotional kick of having a ‘market based approach’. As stated, this is a compromise between outright ban (entirely impossible) and doing nothing (entirely unacceptable). And if we are going to have better batteries then we are, as stated, just shifting the pollution (at this point) upstream from the cars to the plants.
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p>I’m aware the program is a compromise. Look, I don’t know the details of what are in the bill; that’s why I included all those disclaimers. It sounds like you’re saying the bill only applies to power producers. That’s only 21% of greenhouse gas emissions. Are we going to pass another bill after we pass this one, to take care of the other 79% of the emissions?
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p>I used to live in Uganda, and had nothing to do but listen to the BBC a lot. It’s been a long time, so I can’t provide links or anything, but the EU’s program allows you to gain offsets by doing something to reduce pollution, or potential pollution, in developing countries. Building a wind turbine in Uganda, for example, allows you to output more carbon in Europe. The whole notion of which not only seems ripe for fraud-is the EU going to check every project in every developing country to make sure it actually exists?-but also functionally questionable, because those wind turbines aren’t reducing pollution. They might reduce it in years to come, and God knows they’re worth building. But right now Uganda, and most of the rest of Africa, needs every watt it can get, so they’re not replacing any existing power plants, just augmenting them.
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p>Again, it’s been two and a half years, so maybe I’m misremembering. I do that on occasion.
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p>I’m talking about importing physical items, not electrical power. Could I build a car in China, outputting as much carbon as I want, then import it into the US? And, if China does implement real pollution regulation, could I build it in Vietnam, or Indonesia, or Tanzania? Carbon doesn’t just come from power plants; I’m going to produce a lot of it making the steel for the car.
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p>Those aren’t the only two options. And I think it’s a bad compromise-I think it’s a system that will end up so overcomplicated that it will leak like a sieve. And I think the reason we’re doing this instead of a carbon tax is because it’s market-based, so it appeals to the Friedmannians.
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p>Look, I would really like to be wrong. Because I think this is the only game in town for the foreseeable future. And it’s probably better than doing nothing. But once we start controlling outputs in this way, that regulatory structure gets locked in; it’s going to be a lot harder to change course down the road if we realize it doesn’t work.
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p>At this time, you can’t build a car in Vietnam, Indonesia, nor Tanzania. You could build some car parts, sure, but a whole car which meets Western standards? Nope. Not in the near future, either. In none of those countries is there sufficient expertise in building, running, or managing a factory. They don’t have transportation robustness necessary for supply chain assurances. Energy availability isn’t so clear either. One couldn’t set up a large scale factory in those places because they’re simply not stable enough. Could they get there? Sure, eventually.
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p>You’re right to worry that some carbon offset will be, ahem, offset by offshoring. Some of that certainly will happen. But, not all manufacturing will go offshore, and not all of our economy (or, more relevantly, our carbon emissions) are due to manufacturing.
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p>If tUSA does implement a legit cap and trade, it does two things: one, it really does reduce total carbon emissions, from the nation with an incredibly large emission rate per capita. Secondly, it allows far more political pressure to be placed on China (and then, India). With Europe and tUSA both slowing down carbon, they’ll use the force of trade to get China et al to comply. Those very small developing nations? They’re next. Want to import to tUSA, EU, China? Clean up your act.
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p>The US is the second item in the chain reaction, after the EU. Once we go off, the third item in the chain reaction (China) can go, but not before. We’re holding things up.
I really do. But I’m not as optimistic as you.
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p>Like cap-and-trade, the carbon tax allows the free market to find the cheapest ways to reduce CO2 emissions. Even some conservative economists believe it would be more efficient than cap-and-trade. The carbon tax is not on the table simply because we call it “a tax.” That’s the pathetic truth of our political culture today.