Earth Equity News

Sprint vs. Marathon: Caps vs. Tax. By James Handley, Carbon Tax Center, April 10, 2008. "In February, a Congressional Budget Office study compared the [cap-and-trade and a carbon tax], concluding that 'a tax would be roughly five times as effective at reducing greenhouse gas emissions as a fixed cap.' Read that again. Better yet, read the summary of the report. Why is setting a price (or tax) for emissions more efficient than a cap? Because reducing greenhouse gas emissions is more like a marathon than a sprint. The cost of cutting emissions tends to go up with each additional reduction, while the benefit remains essentially constant. (Every ton of carbon dioxide has the same heat-trapping effect.) So spending a lot to meet a fixed 'cap' in one month doesn't help as much as spending that same money to make larger (cheaper) reductions over a longer time. Setting a price for emissions creates the incentives for our economy to become a marathoner. We face a long race and we have to run it smoothly and efficiently. No point in exhausting ourselves on jackrabbit leaps."