Earth Equity News

Add OPEC Profiteering to the List of Reasons to Ditch Cap-and-Trade. By James Handley, Carbon Tax Center, 12/11/10. “The drawbacks of the cap-and-trade approach for pricing and reducing carbon emissions are legion. They include complexity, volatility, lack of price predictability, vulnerability to financial speculation, and impossibility of harmonizing across borders. Now there’s another, courtesy of a 2010 report by an economist at the World Bank: ‘Institution of a cap-based emissions program by oil-importing countries works to increase oil exporters’ market power, revenue and profits;whereas a carbon tax would have the opposite effect.’ That’s the conclusion we draw from Jon Strand’s Taxes and Caps as Climate Policy Instruments with Domestic and Imported Fuels [PDF, 47 pp]. As Dr. Strand… chairs the economics department at the University of Oslo and serves as a senior economist at the World Bank since 2008… It’s worth noting that economic analysis suggests that a carbon tax would tend to work against the interests of the oil cartel, while cap-and-trade would tend to reinforce the cartel’s price-setting leverage.”