Questioning Cap and Trade: Part 2
In my last post, I questioned the efficacy of the Carbon Cap and Trade bill that recently passed in the House. Today, I’ll tell you more about why I’m concerned, and how I’d propose a solution.
Awful Offsets
Carbon offsets, the guilt offerings of the 21st Century, have been rightly questioned and lambasted by almost everybody who’s paying attention.
Aside from the questionable moral position of paying someone else to do your dirty work, there’s a strong possibility that offsets won’t help us achieve our carbon reduction goals. First, offsets require that you verify and prove that something might have happened, but didn’t. In other words, you need to measure what didn’t occur! If we didn’t build this solar panel, how would the power company have generated that kilowatt hour? The answer is notoriously difficult to define.
What about other projects like tree planting? At least you can estimate the volume of a tree and how much carbon it might take up to produce the wood. The problem is that if the tree falls down and decomposes, much of that carbon can go back into the atmosphere. Most carbon accounting standards require that the emission reductions be permanent, but how do you ensure there will be no forest fire, drought, or insect damage?
The bottom line is that offsets encourage estimation, and that allows for a lot of wiggle room in “measuring” the emission reductions. Individuals and businesses will be encouraged to “get creative” in their carbon accounting, and that means Company X continues producing carbon, while potentially buying worthless offsets. It’s an expensive form of doing nothing.
A Better Way
If legislators want to manage carbon in a viable and verifiable way, they have a few options available. I tend to advocate big-picture legislation that helps define the rules and boundaries for the system, without picking and choosing the winners and losers. To that end, I would propose the following items:
End Subsidies
If you ate 3 Big Macs every day at lunch, joining a gym might not be your fastest road to weightloss. Far better to cut back on the burger binge, and then start planning your exercise routine.
It may surprise you to know that the US Govenrment collects billions of dollars from you and your friends to give it to oil, gas, coal, and nuclear companies. The 2005 Energy Bill had $6,000,000,000 for Oil and Gas companies, $9,000,000,000 in coal subsidies, and a whopping $12,000,000,000 for nuclear, along with a string of regulatory rollbacks. And that’s not including the trillions of dollars our “defense” budget allocates to wars in countries that harbor our energy interests. Think solar power can’t compete in the free market? I’d argue that fossils and nuke can’t either.
Step one of any sensible carbon legislation would be to stop feeding the beast and roll back all energy subsidies. Then we’ll see which technologies are competitive.
Tax not Trade
I suspect that ending subsidies would help make low-carbon infrastructure much more appealing, but if we still need carbon regulation, it should come in the form of a tax, not a trade. I won’t belabor the point, but I will direct your attention to a great article by John Sall of SAS. He uses supply and demand to demonstrate how a carbon tax actually helps predict the carbon savings, stabilize the prices, and allow companies and consumers to plan for the future.
I hope that all makes sense. I’m sure Waxman and Markey are constantly scouring the blogosphere for ideas on their bill. Right?
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