Earth Equity News

Cap and Fade: Perpetuating GHG Emissions and Fleecing the Public. Commentary by James Hansen, NYTimes, December 7, 2009. "At the international climate talks in Copenhagen, President Obama is expected to announce that the United States wants to reduce its greenhouse gas emissions to about 17% below 2005 levels by 2020 and 83% by 2050. But at the heart of his plan is cap and trade, a market-based approach that has been widely praised but does little to slow global warming or reduce our dependence on fossil fuels. It merely allows polluters and Wall Street traders to fleece the public out of billions of dollars... Because cap and trade is enforced through the selling and trading of permits, it actually perpetuates the pollution it is supposed to eliminate. If every polluter's emissions fell below the incrementally lowered cap, then the price of pollution credits would collapse and the economic rationale to keep reducing pollution would disappear... To compound matters, the Congressional carbon cap would also encourage 'offsets' -- alternatives to emission reductions, like planting trees on degraded land or avoiding deforestation in Brazil. Caps would be raised by the offset amount, even if such offsets are imaginary or unverifiable. Stopping deforestation in one area does not reduce demand for lumber or food-growing land, so deforestation simply moves elsewhere... If that isn't bad enough, Wall Street is poised to make billions of dollars in the 'trade' part of cap-and-trade. The market for trading permits to emit carbon appears likely to be loosely regulated, to be open to speculators and to include derivatives. All the profits of this pollution trading system would be extracted from the public via increased energy prices.

"There is a better alternative, one that would be more efficient and less costly than cap and trade: 'fee and dividend.' Under this approach, a gradually rising carbon fee would be collected at the mine or port of entry for each fossil fuel (coal, oil and gas). The fee would be uniform, a certain number of dollars per ton of carbon dioxide in the fuel. The public would not directly pay any fee, but the price of goods would rise in proportion to how much carbon-emitting fuel is used in their production. All of the collected fees would then be distributed to the public. Prudent people would use their dividend wisely, adjusting their lifestyle, choice of vehicle and so on. Those who do better than average in choosing less-polluting goods would receive more in the dividend than they pay in added costs. In a fee-and-dividend system, every action to reduce emissions -- and to keep reducing emissions -- would be rewarded. Indeed, knowing that you were saving money by buying a small car might inspire your neighbor to follow suit. Popular demand for efficient vehicles could drive gas guzzlers off the market. Such snowballing effects could speed us toward a pollution-free world. The plans in Copenhagen and Washington have not been finalized. It is not too late to trade cap and trade for an approach that actually works." James Hansen is the author of the forthcoming "Storms of My Grandchildren: The Truth About the Coming Climate Catastrophe and Our Last Chance to Save Humanity."