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What the US Can Learn From Europe's Pollution Credit System 425

Posted by timothy
from the three-euro-per-croissant dept.
Al writes "Technology Review discusses what a US carbon trading scheme could learn from the flawed European experience. Advocates of carbon-trading schemes like to point to Europe's cap-and-trade program as a model worthy of emulation, but the reality has been less than perfect. A glut of pollution credits, distributed without cost during both the first, transitional phase of the program and the current working phase, drove down the value of the EUAs. As a result, Europe's carbon dioxide emissions remain priced well below 20 euros per ton. With the price of pollution so low, economists say, industries that generate and consume energy have no incentives to change their habits; it is still cheaper to use fossil fuels than to switch to technologies that pollute less. Establishing a carbon price in the US system now, and tightening the system later, could send a dangerously wrong signal to financial markets looking to invest in new energy technologies."
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What the US Can Learn From Europe's Pollution Credit System

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  • by caladine (1290184) on Wednesday July 01, 2009 @04:26PM (#28548853)
    WTB Mod points. The linked article is great.
  • The counterpoint (Score:5, Informative)

    by dachshund (300733) on Wednesday July 01, 2009 @04:35PM (#28549021)

    As this [tnr.com] article points out (with a nice graph), the market has recovered from its initial missteps. Carbon emissions have been trending down (even before the mega-recession began), and Europe is on track to meet the Kyoto requirements (8+% below 1990 levels) by 2011. The major problems had to do with a lack of data about how much carbon the European countries were emitting. Therefore the cap was set too high. There have been several adjustments since then, and the results have become much better.

    One hopes that we'll be able to avoid this, since we have much better emissions data. To my mind, the most important finding of the post above is that corporations are finding massive improvements in efficiency, since the cap has essentially set a price on emitting carbon. This, plus technological development, is going to make the problem a lot less scary than conservative estimates would have you believe.

    (Now there are various caveats. The really big one being the ability of nations to "outsource" their emissions by importing from nations with no such caps. But I don't think this is an argument for removing the caps --- rather, we should be finding ways to integrate the trading schemes of those nations with caps, and recover some of the carbon cost on imports from the other nations.)

  • Re:Yeah, funny that. (Score:5, Informative)

    by megamerican (1073936) on Wednesday July 01, 2009 @04:40PM (#28549131)

    The cap and trade bill that just passed the house will simply drive all of the industry further to China and the third world where there are scant environmental regulations.

    It was really scary watching C-span on Friday where every Democrat talked about how this bill will create jobs and save the planet. That isn't an exaggeration in the least. Then the Republicans would speak and quote from all of the studies showing how it will destroy jobs and our econonmy. Now that the Republicans aren't in power they are allowed to use some sense.

    It was very funny how last Tuesday the bill was at 300 pages then on Friday it became up to 1500 pages and then down to 1200 something pages. It was simply impossible for anyone to have read it, let alone comprehend it.

    From what I've read of the bill it sounds a lot like the system put in Spain which isn't doing wonders for their economy and also sounds like Agenda 21 of the UN.

    Essentially we are screwed. It doesn't matter who you vote for or what ideology you are, unless you're in the big club your face is being stomped on right now.

  • by dachshund (300733) on Wednesday July 01, 2009 @04:44PM (#28549223)

    ...is that it's not progressive. So Joe Sixpack bears a much higher load in proportion to, say, Al Gore

    Whether a Cap & Trade scheme is progressive depends entirely on how you give out the emissions permits. Auction them off and rebate the proceeds to the taxpayer (even if it's a flat check to every American), you have an enormously progressive plan.** Give them away and you have a regressive plan.

    Now if you want a progressive version, contact your member of Congress and tell them to support that. Unfortunately, the regressive version seems to be what the most conservative members of Congress want, and since the Republicans are opposing anything, then that's probably what we'll get. It's still better than nothing, and if you want better, then stop concern trolling about it and start voting for more progressive Congresspeople.

    ** Citation, from the CBO analysis. Sadly I have to give the graph excerpted on this blog page, since I didn't have time to hunt for the original: http://yglesias.thinkprogress.org/archives/2009/04/making_cap_and_trade_regressive.php [thinkprogress.org]).

  • by georgenh16 (1531259) on Wednesday July 01, 2009 @04:45PM (#28549237) Journal
    9.x% - they don't care if it's over 15%!

    Even as Democrats have promised that this cap-and-trade legislation won't pinch wallets, behind the scenes they've acknowledged the energy price tsunami that is coming. During the brief few days in which the bill was debated in the House Energy Committee, Republicans offered three amendments: one to suspend the program if gas hit $5 a gallon; one to suspend the program if electricity prices rose 10% over 2009; and one to suspend the program if unemployment rates hit 15%. Democrats defeated all of them.

    -Wall Street Journal

  • Re:Yeah, funny that. (Score:1, Informative)

    by Anonymous Coward on Wednesday July 01, 2009 @04:48PM (#28549307)

    It's important to note that the costs of externalities are borne somewhere, and this leads to inefficiencies. Internalization is not just for the sake of idealism. Suboptimal resource allocation occurs when externalities are left alone.

    In the case of carbon taxation, by reducing the percentage of power generated by coal, we'll see positive effects like lower asthma rates in urban areas east of Ohio. Lower medical costs in these areas should partially offset higher energy costs. If the cap level is properly set, as mentioned earlier, this is a net win for everyone.

    Even assuming small harms, we still get something for the tax, you're not paying for nothing. Reducing our dependence on fossil fuels (either by forcing conservation or by developing new energy resources) makes life long into the future more sustainable, for example.

  • Re:Yeah, funny that. (Score:3, Informative)

    by dwiget001 (1073738) on Wednesday July 01, 2009 @04:59PM (#28549521)

    ** I wish I had mod points. Why is this so hard to understand? Tax free R&D for green tech is the way to go. **

    It isn't hard to understand.

    The *problem* with it is, the people in power (and you can call them Democrats or Republicans, they both are like this) would lose the POWER attendant upon the Cap and Trade nightmare. It is not about "cleaning up the environment, greener technologies" or anything remotely like that for the politicians. It is solely and only about getting in and expanding their power, damn the country and the U.S. citizenry.

    Oh, sure, there are a few good politicians that A) genuinely want to help make the country better but B) they are drowned out by the 1) clueless ones, 2) power hungry ones and 3) the totally spineless ones.

  • by jockeys (753885) on Wednesday July 01, 2009 @05:10PM (#28549765) Journal

    Bullets are lead*,

    -nB

    *I know, not any more they aren't...

    actually, they still mostly are, just usually jacketed with copper. you've got your weird steel/bismuth rounds, too, but that's pretty rare. the military also occasionally uses tungsten and depleted uranium, but again, it's pretty rare.

  • by wizardforce (1005805) on Wednesday July 01, 2009 @05:10PM (#28549767) Journal

    CO2 levels can and do rise as a result of temperature however, that doesn't have anything at all to do with whether or not CO2 acts on its own to raise temperature. The fact is that CO2 can and does raise temperature, not debatable. You can argue to the extent but not as to whether or not it does. Too much science supports the conclusion that CO2 insulates and raises temperature of an atmosphere to ignore.

  • by j79zlr (930600) on Wednesday July 01, 2009 @05:31PM (#28550121) Homepage

    The government will use that money and thereby reduce the need for other taxes or, more probably, use it to offset the rampant deficit spending already taking place.

    You are not from around here are you?? If they get more money, they spend more money, period.

  • by Coolhand2120 (1001761) on Wednesday July 01, 2009 @05:39PM (#28550241)
    The goal of the legislation is to make energy produced with fossil fuels more expensive. Even so many proponents of the bill claim it will not drive up the cost of energy. How stupid is that? The goal of the bill is to drive up the cost of energy!

    And where does the money go? That's the stupidest part, is nobody really knows, it is as convoluted a scheme as anyone could ever come up with.

    The only people who will benifit are the people who are lobbying for their little piece of the taxpayer pie right now. What's the very worst part? The senate approved the measure down party lines, squashing a filibuster, without reading even reading the god damn thing, AGAIN. In fact there was a 300+ page amendment to the 1500+ page bill at 3AM the MORNING OF THE VOTE! How can anyone who voted for this even claim to be responsible? This is political absurdity at what I hope to be its peak.
  • Re:Yeah, funny that. (Score:4, Informative)

    by Wonko the Sane (25252) * on Wednesday July 01, 2009 @06:30PM (#28550975) Journal

    In Spain every "green" job created came at the cost of 2.2 "regular" jobs lost.

  • by MobyTurbo (537363) * on Thursday July 02, 2009 @12:32AM (#28553901) Homepage
    Seriously, Obama may be to the left of center, on some issues well to the left, but he's not a Communist. Last time I checked we didn't live in a dictatorship of the Proletarait with the party owning the means of production.

    (And by means of production I don't mean General Motors; I mean the whole kit and kaboodle. If you say General Motors means we're in Soviet Russia, Great Britain has owned failed auto companies since the 1960s, is far more "socialist" than Obama, and last time I checked they still had fair elections and freedom of religion, private ownership of most property, and so on.)

    I should note that I'm not much of an Obama supporter, mainly because I think that he's doing what George W. Bush did, propping up everything and anything that is "too big to fail" until he sends both government and industry into bankruptcy togeather. I recognize however that Obama is not a Communist, he's doing what he's doing mostly on the behest of Wall Street interests rather than Marx.

  • by elkto (558121) on Thursday July 02, 2009 @09:31AM (#28556777)
    Jeez, the mantra continues.

    Last year the earth cooled ALLOT [climate4you.com]
    Arctic sea ice has been GROWING [photobucket.com]
    The Green house gas argument is a number scam. (Ponzi anybody?) [geocraft.com]
    And unless we get allot more sunspots soon, we be PRAYING for a little global warming. [nasaprs.com]

    On top of all that, the psuedo scientist out there call people that present these FACTS "Flat Earth'ers".

    Wake up people, you are being taken for a ride.

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