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Power Earth Government The Almighty Buck United States Politics

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

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 Anonymous Coward on Wednesday July 01, 2009 @04:14PM (#28548617)

    ...a huge fraction of the economy will soon degenerate into a free-for-all of special interest group favoritism, graft, corruption, and kickbacks?

    Of course, Obama and Congress know all that. That's why they're doing it...

    • ...a huge fraction of the economy will soon degenerate into a free-for-all of special interest group favoritism, graft, corruption, and kickbacks?

      You mean we don't have that now?

      Of course too many people want to make others pay for their own damage.


    • by EraserMouseMan ( 847479 ) on Wednesday July 01, 2009 @04:52PM (#28549399)
      Hey! Lay off of Obama. Or ACORN will bust your kneecaps.
    • by scamper_22 ( 1073470 ) on Wednesday July 01, 2009 @11:10PM (#28553485)

      Here's a little question. Does anyone here not see the market working?
      Toyota Prius?
      Everyone seems to be doing plugin hybrids by 2010.
      Google's funding nano-solar.
      Countless ventures are out there in terms of battery power, renewables...

      So if I might ask... what the hell is the problem? There's no shortage of research or money in the field. If technology can solve this problem, it will.

      Any tax now would hurt the poor the most. Which is not a nice thing in this economy... much less any other time. The rich can afford a prius and to live in downtown near the subway.

      That said, I 100% understand accounting for externalities in the market. Of course, we already tend to have those... it is called a gas tax for gasoline which hasn't be used to pay for roads in a long time.

      I would be 100% for a global warming tax... if and only if 100% of the revenues go towards countering the effects of global warming (building levies, moving populations from low lying ares ...).

      Unfortunately, this is just going to become one massive corruption scheme.
      Big finance making billions off doing nothing... just playing a game of carbon credits.
      Governments handing out contracts and making laws to benefit certain businesses and industries...
      It's going to be a mess. But central planning is always a mess. Americans lived without it for a while... but every country gets its chance to be ruined by central planning.

  • ...is that it's not progressive. So Joe Sixpack bears a much higher load in proportion to, say, Al Gore. An article by Robert Zubrin [rollcall.com] pegs this cost as $1800 for a family of four. This on top of a 9.x% unemployment rate. Huh.

    • Re: (Score:3, Informative)

      by caladine ( 1290184 )
      WTB Mod points. The linked article is great.
    • by DriedClexler ( 814907 ) on Wednesday July 01, 2009 @04:32PM (#28548987)

      So pay a uniform "pre-bate" [1]to everyone equal to the "energy tax" they would pay if their income were x% of the poverty level. (Again, that's a uniform prebate to all adults, with no means-testing.)

      Then, the only people whose *net* taxes go up are the ones making above the poverty level and don't reduce energy use. And the poor's taxes (by whatever definition you use for x) don't change. And it retains the incentive for everyone, including the poor, to cut back whatever energy consumption they can.

      [1] For those of you with low intelligence or born before 1960, read that as "Mail a check".

      • by mea37 ( 1201159 )

        Ok... I question the assumptions in GP's article, but I also question your solution. It would work fine if the tax were progressive, but if the assumption is that the burden on a poor person is the same as the burden on a rich person, then "prebating" enough that the poor guy's net tax is 0 means everyone's net tax is 0.

        Now to be fair, like I said, I doubt the burden would be shared equally. And in fact I'll bet the richer you are, the more carbon credits you end up paying for indirectly. (You heat, cool

        • by DriedClexler ( 814907 ) on Wednesday July 01, 2009 @05:19PM (#28549937)

          It would work fine if the tax were progressive, but if the assumption is that the burden on a poor person is the same as the burden on a rich person, then "prebating" enough that the poor guy's net tax is 0 means everyone's net tax is 0.

          Not sure I understand. My solution was just prebating energy taxes, and I mean the net tax *change* is zero, and if you base it on poverty level energy spending, that makes it progressive. Because you net change in taxes (if they go up) is equal to the tax you pay on each unit of energy you consume *above* the poverty level energy consumption.

          In other words, if E is the cost of the energy concent of goods you consume, and t is the effective tax on energy, and P is the poverty level spending on energy, and R is the Rebate, your net change in taxes is:

          E*t - P*t

          or, t*(E-P).

          1) How will you calculate the amount of this "prebate"? Will it be figured "per man woman or child" in line with the article's assumptions? How much per? How will ou even begin to estimate this?

          Yes, great concerns, all, but you're changing the topic. The original concern was "but this will hurt the poor". Fine. There are trivial ways to remove this unpleasant aspect without fundamentally changing the plan or its incentives on any marginal unit of fossil fuels. I just explained how.

          2) How will you fund the "prebate"?

          From the auction revenues.

      • by YrWrstNtmr ( 564987 ) on Wednesday July 01, 2009 @05:15PM (#28549847)
        So pay a uniform "pre-bate" [1]to everyone equal to the "energy tax" they would pay

        Hold the phone, homer. How about don't take it from me in the first place! The government can't send you a 'check' unless they take the money from you first.
    • by blueg3 ( 192743 )

      I have a hard time taking anything he says seriously when, by his logic, my electricity should actually cost about 0.8 cents per kilowatt-hour.

    • true, although progressive taxation isn't harmless either. THe money has to come from somewhere whether it be from raising prices, firing workers or reducing investment it will indirecty affect others who don't actually pay the tax directly.

    • 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]).

      • Re: (Score:3, Interesting)

        by sumdumass ( 711423 )

        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.

        I don't follow your reasoning here. All costs are past on to the consumer so any costs assessed to businesses will most likely be passed onto the consumer. The only way it would be more likely to come from pr

    • 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: (Score:3, Interesting)

        by demachina ( 71715 )

        If anyone is really worried about spiking oil and gasoline prices you should be a lot more worried about the role speculators are playing in the commodities markets than any effect cap and trade will have. Rolling Stone has an excellent exposé [scribd.com] on the role Goldman Sachs in particular played in running oil prices up to $147 a barrel. Its a must read if you want to understand how Wall Street screws the rest of us to take home their multimillion dollar pay checks. This link is a scan, Rolling Stone does

    • ...is that it's not progressive.

      Nor should it be, you pollute you should pay. The more you pollute, and the wealthy generally pollute more, the more you pay.


    • Natural systems don't care what our unemployment rate is.
  • Yeah, funny that. (Score:4, Insightful)

    by dwiget001 ( 1073738 ) on Wednesday July 01, 2009 @04:21PM (#28548745)

    How about NOT burdening each and every citizen with higher energy costs for some forced and flawed utopian ideal which might result in a whopping 0.2 percent carbon emmissions. further wrecking the U.S. economy and industries.

    If the new technologies being talked about, worked on, etc. are not economically feasible because of the current price of other energy generation, too bad.

    The solution would be to get the "new" technologies to produce energy at or below the cost of current energy generation, not taxing everyone in oblivion to artificially do this.

    Sure, do all you can to help clean up the environment and to minimize or eliminate pollution. I am all for cleaner, greener, etc. I am not for more tax burdens on top of the already increased tax burdens I and many many others are now facing in this country.

    The U.S. government is (and has been) in the hands of A) lunatics and B) people that couldn't run a business if their lives depended on it (the greatest majority of them, in any case).

    • by mrvan ( 973822 ) on Wednesday July 01, 2009 @04:35PM (#28549027)

      In economics, it is generally accepted that the free market only establishes the right price of a good if there are no externalities. Hence, if producing a good is cheap but has large negative external effects (eg pollution, human harm), the market will price it lower than would be optimal for the society at large, because they are paying the price of the externality (eg by cleanup costs, reduced hapiness/lifespan).

      The main ways to 'internalize' these externalities so the free market can do its job are (1) explicitly internalizing the externality, eg making employers responsible for workplace accidents, making mining companies etc pay cleanup costs), or (2) taxing the factor causing the externality so the price is about right. The latter option has the drawback of somehow determining the right value of the externality. A Cap-and-trade system does this by creating artificial scarcity, but the amount to cap is difficult to establish and ultimately a political decision.

      What I am trying to say is that cap-and-trade is not some sort of socialist contraption. Rather, it is one of the most natural ways of dealing with a negative externality in a free market system.

      Ignoring the externality is a fuck-the-others (in this case, fuck-the-children) mentality that has nothing to do with the ideal free market or (broad and/or long-term) prosperity

      • Re: (Score:3, Interesting)

        And there is plenty of disagreement that there are much negative externalities about carbon dioxide. Besides that, what you say makes sense.

        The other problem is determining how much negative externalities actually exist for carbon dioxide if we assume they do exist.

      • A Cap-and-trade system does this by creating artificial scarcity

        So if the US has a cap of X tons, and we reach X-1 tons, is the government going to come in and shut down all CO2 emitting devices?

        Cap and trade doesn't really create scarcity because the enforcing agency cannot physically enforce the cap without inciting civil (or probably global) war. Essentially it only works if enough of the parties which produce the capped good voluntarily participate.

    • 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.

    • Since the tax is in addition to other taxation I'd agree; a better alternative would be to *replace* the current disgustingly complicated loopole riddled mess of a tax system with one that is simpler; property taxes, flat income tax or some sort of "fair tax" like alternative. The current system is supportive of spending and acts in effect to favor some individuals over others arbitrarily.

    • by chrb ( 1083577 ) on Wednesday July 01, 2009 @04:55PM (#28549453)

      Sure, do all you can to help clean up the environment and to minimize or eliminate pollution. I am all for cleaner, greener, etc. I am not for more tax burdens on top of the already increased tax burdens I and many many others are now facing in this country.

      One of the best ways to reduce pollution is to tax it. Reducing pollution costs money. The purpose of a corporation is to generate profit for shareholders. Given the choice, no corporation would reduce pollution instead of returning a higher dividend. So, for pollution to be reduced, government has to be involved somehow. There are two possible ways:

      • A blanket ban on technologies. Government says what you can and can't use in your business.
      • A tax that charges the externality cost back to the original product and lets the market produce the most efficient solution

      I recommend that everyone who is interested in this topic should read The Undercover Economist [amazon.co.uk] by Tim Hartford, particularly chapter "Crosstown Traffic" subsection "Battling pollution on the cheap". The gist of it is that sulphur dioxide emissions were successfully reduced by taxation to the point where the tax is negligible. Initially, the corporations involved in power generation claimed that it would be impossible to do, that each ton of reduction in emissions would cost thousands of dollars. And yet, within 3 years of an auction based taxation being introduced, the cost per ton had fallen to $70.

      Isn't this exactly what we all want? A market based solution to the problem, rather than overbearing government regulation?

    • If the new technologies being talked about, worked on, etc. are not economically feasible because of the current price of other energy generation, too bad.

      Yea, because alternative energy sources can't compeat with coal they shouldn't get subsidies. Only coal, and nuclear, should get subsidies. Here's Chevron teeming with the Sierra Club to end coal subsidies [grist.org]. And here's the freemarket CATO Institute reprinting a Forbes article saying Nuclear power is "Hooked On Subsidies [cato.org]".

      The U.S. government is (and has

  • Reminds me of the anime, "Shangri-La". Carbon credits are sold like on a stock market. Kids have the market under their complete control. It's pretty ridiculous.

  • by DriedClexler ( 814907 ) on Wednesday July 01, 2009 @04:23PM (#28548785)

    The other important consideration is making sure you don't just shift the problem. If only a few countries, or even most of them agree to restrictions, the rest of the world will shrug its collective shoulders, and take on the fossil fuel burning and productino that the nicer countries have kept themselves from doing. Specifically, the BRIC block (Brazil, Russia, India, and China).

    Any plan for such a global problem MUST take into account the actions of such "defecting" countries, or you might as well not bother. That can mean using auction revenues to sink CO2, tariffing non-compliant countries (though with blanket punitive tariff on all of their products; it's too much work to figure out the marginal CO2 impact of any one product when they're not pricing its cost in), and yes, even geoengineering.

    "Unilateral disarmament" is symbolic at best.

    • by Chris Burke ( 6130 ) on Wednesday July 01, 2009 @04:38PM (#28549105) Homepage

      Specifically, the BRIC block (Brazil, Russia, India, and China).

      Not to mention Latvia, Estonia, Georgia, and Oman. The LEGOBRICs will be the building blocks of our destruction.

    • If you've ever taken a look at the estimates for fossil fuel reserves and economic growth of said countries, the falling production combined with increased demand for fuel may solve the problem anyway. From the estimates I've seen, we're at least 80% of peak production and we're due to hit the max in a decade or so. Production falls off in a bel-curve fashion forcing the utilization of alternatives or economic decline.

      • Re: (Score:3, Insightful)

        by dachshund ( 300733 )

        You're not counting coal reserves, which will eventually tail off as well, but could probably see considerable increase in production (particularly as China continues to develop).

        In any case, "solving the problem" --- by burning through so much of our reserves that other technologies become cost-effective --- may not be the safest strategy.

  • by jmorris42 ( 1458 ) * <jmorris@[ ]u.org ['bea' in gap]> on Wednesday July 01, 2009 @04:26PM (#28548847)

    If the goal is 'saving the Earth' Europe's carbon tax isn't working very well. But if the goal is raising taxes and growing government control then it is a success.

    So it should come as no surprise that the US is eager to emulate the success of Europe's 'cap and trade' regime. The green movement is basically a watermelon, enviro green on the outside and red communist inside. The green movement was subverted and taken over back in the Soviet days when almost every group that didn't take overt efforts at resisting such a takeover was borged and used as a front.

    But to their credit even Greenpeace was against the atrocity the House just passed. Because they still have enough true believers in environmentalism left that understand what the cap and trade plan moving through Congress really is. Any benefit to the environment will be a happy accident. They give away almost all of the credits in the short and medium term to political allies to allow them to pollute all they want. The point is to slowly gain CONTROL over vast swaths of the American economy.

    If we really want to control carbon emissions a huge new government structure that will always throw 'free credits' out anytime there is real pain (i.e. enraged ratepayers, a plant about to close, a huge sack of campaign cash offered, etc.) so there won't be much real reduction.

    No, just put a straight TAX on energy sources that you want to discourage. Personally I'm not a believer in AGW but I could get behind such an effort on the grounds of reducing our dependence on oil form countries that want us dead. But I can't support cap and trade because a) it won't work and b) is a solution worse than the problem.

    • Re: (Score:3, Funny)

      by Alsee ( 515537 )

      The green movement is basically a watermelon, enviro green on the outside and red communist inside.

      And don't forget the Seeds Of Homosexuality inside!

      Remember kids, Jesus hates commies, and he hates gays, and he hates the environment, ummmm and he hates watermelons. Jesus especially hates the Gay Seeds of Homosexuality in watermelons.


  • Wind/Solar Only? (Score:5, Insightful)

    by Hubbell ( 850646 ) <{moc.evil} {ta} {iillebbuhnairb}> on Wednesday July 01, 2009 @04:30PM (#28548915)
    Why is the bill worded to demand that only solar/wind be advanced as renewable when for all intents and purposes Fast Breeder Nuclear Reactors are cheaper (these renewable sources are much more expensive barring an insanely good breakthrough/require MUCH LARGER areas to be anywhere near current power plant outputs) and also renewable in the fact that they burn their waste, then burn their wastes waste, etc, all the way down to burning 90+% of their waste with the remaining byproduct only being slightly hot for 5-10 years?
    • by pilgrim23 ( 716938 ) on Wednesday July 01, 2009 @04:49PM (#28549353)
      Actually, you are quite right. pity I have no points to mod you up. Nuke Energy is indeed the best bet. Wind? when do you need energy to run the air conditioner? When it is hot and still. Hydro? but that hurts the fishes; Tear out the dams!. Other renewable? Show me one ONE ton of steel smelted by "Green" fuel. over the last 200 years, the winner of every conflict has been the country with the greatest production of steel by ton. Yes I know Nuke is evil (TM) but it is the only green tech we currently have. Yes Green. Of course, Alternately, you could learn Mandarin to speak for better treatment from your masters. mucking manure in a rice farm is after all an eco- paradise...
    • by dan_sdot ( 721837 ) on Wednesday July 01, 2009 @05:58PM (#28550527)
      Because many of the most powerful environmental lobbies are just a bunch of fanatics who throw around the word "science" even though their hatred of nuclear power is more of a religion.
  • Flawed? (Score:5, Insightful)

    by psnyder ( 1326089 ) on Wednesday July 01, 2009 @04:32PM (#28548979)
    Politicians grabbing at money via legislation that's difficult to monitor and enforce, so that companies will invest in technologies that are inefficient or don't exist yet?
    How is this a flawed system?
  • 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: (Score:3, Insightful)

      by caladine ( 1290184 )

      (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.)

      This is a massive caveat. I don't think that "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" is going to work either. The long and short of it is that you'd like to impose some kind of "carbon tariff" on imports from said countries. That'll fly as well a bird with clipped wings, and will lead to retaliatory tariffs. This also says nothing about what the WTO would think about such a tariff in the first place

  • breathing tax? (Score:2, Interesting)

    by TimSSG ( 1068536 )
    Any Idea how they are going to tax breathing?
    I know they have not said they are going to do it; but, see option 3 I think the Libs will like it.
    The way I see are
    1. Flat rate per person
    2. Prorated based on the weight of person
    3. Just tax the calories in food.
    (Carbon production in people is closely related to calorie intake)
    Tim S
  • by Anonymous Coward on Wednesday July 01, 2009 @04:37PM (#28549083)

    This is only dealing with the symptoms, just like any other environmental protection scheme.

    There is only ONE environmental problem, which is the root cause for all other environmental issues. Solve that problem and all others will automatically disappear.
    That problem is overpopulation. massive overpopulation.

    Please go on ignoring the problem while jumping to the conclusion I want to kill 95% of the population, probably applying some eugenics on the way, and mod me -1, Nazi .

    • by CrimsonAvenger ( 580665 ) on Wednesday July 01, 2009 @05:33PM (#28550143)

      That problem is overpopulation. massive overpopulation.

      So, what do you think the ideal population should be?

      Frankly, I fail to see overpopulation as the problem, since our population (in the advanced countries that are actually capable of limiting pollution) is declining, and has been for years.

    • > That problem is overpopulation. massive overpopulation.

      Nope, you are looking at a symptom not the cause. The problem is the uneven distribution of capitalism and liberty. Go look at the numbers. There is an unmistakable link between freedom, wealth and birth rate. The link is even better if you assume a two generation lag on the birth rate vs the other factors.

      The solution is thus simple, bring the blessings of liberty to the huddled masses yearning to breath free. Help them establish a solid rule of law and watch them become quickly become prosperous. Yes their population will spike as improved conditions permit a population boom, but that will soon stabilize and begin to decline. The US is the only thing resembling an exception to this rule and our population would also be in decline without illegal immigration.

  • who gives a shit? this is political/financial news, not news for nerds. TFA never mentions new tech, emerging tech,or existing tech in ANY light that seems slashworthy.
  • by ThosLives ( 686517 ) on Wednesday July 01, 2009 @04:46PM (#28549259) Journal

    What's irritating is that cap and trade can't even do what it's supposed to do anyway.

    Consider this: a government says "Ok, we'll only sell licenses to produce 100 million tons of CO2 per year." Factories produce a net 130 million tons of CO2 that year, even though they were only licensed to produce 100 million. There is no mechanism the government can employ to enforce the licenses. They could potentially fine the "overproduction" but that doesn't actually prevent the production of the CO2.

    The "credits" bit doesn't work either, and it's even worse than the inability to prevent overproduction. The way I understand it, if I do some activity that offsets CO2 production, I get a credit. The problem is that word "offset". If it was only for sequestration that would be great, but my impression is that if I create a wind farm that produces the same power as a coal plant that would produce 1 million tons, I get a 1 million ton CO2 credit that I can sell to someone else. But since it's possible to create an infinite amount of things that do not emit CO2, there is no cap here either because it doesn't actually prevent the creation of more CO2 - or whatever the target emission might be.

    The only real solution is, even though it's not political, is to simply tax CO2 emissions straight up. Those who don't emit don't pay the tax, those who do pay it. For consumers it's simple - you roll it into fuel taxes because CO2 emissions are directly linked to fuel consumption. For powerplants and such you do the same, and the taxes get passed on to consumers.

    This solution, I think, has the best chance of actually resulting in the desired outcome without being overly complicated or reliant on false ideas of caps that cannot be enforced.

    The biggest issue I see is that CO2 is a byproduct of simply being alive, so you will get into the mess of "do you tax all CO2 emissions, or only those made by machines? What about if some farmer burns brush in his yard? What about campfires?"

    In all, it's really quite a mess when at its core people try to dictate the behavior of others. If you offer an incentive and people don't take it, the solution should not be to beat them with a stick and force them to take it.

  • by chicago_scott ( 458445 ) on Wednesday July 01, 2009 @04:48PM (#28549313) Journal

    Matt Taibbi, in his article The Great American Bubble Machine, asserts that the next bubble will be the carbon trading scheme. Perhaps that's how the Government and Wall Street plan on keeping carbon credits artificially high. That is until the bubble bursts and they raid our tax dollar barrel... again.

    http://www.correntewire.com/great_american_bubble_machine_0 [correntewire.com]

    The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.

    Here's how it works: If the bill passes; there will be limits for coal plants, utilities, natural-gas distributors and numerous other industries on the amount of carbon emissions (a.k.a. greenhouse gases) they can produce per year. If the companies go over their allotment, they will be able to buy "allocations" or credits from other companies that have managed to produce fewer emissions. President Obama conservatively estimates that about $646 billions worth of carbon credits will be auctioned in the first seven years; one of his top economic aides speculates that the real number might be twice or even three times that amount.

    The feature of this plan that has special appeal to speculators is that the "cap" on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. Which means that this is a brand-new commodities market where the main commodity to be traded is guaranteed to rise in price over time. The volume of this new market will be upwards of a trillion dollars annually; for comparison's sake, the annual combined revenues of an electricity suppliers in the U.S. total $320 billion.

    Goldman wants this bill.

  • by 140Mandak262Jamuna ( 970587 ) on Wednesday July 01, 2009 @04:48PM (#28549323) Journal
    Why complicate the process? It is a tax, call it one and make it one in a straightforward sense. Tax coal at some rate, imported petroleum at some other rate and exempt wind and solar energies. Simple. right?
  • The SAVING GRACE of the program is that shares are so low. This is simply an artificially placed surcharge on an economy. I hope that cap and trade in the US is similarly ineffective.

    If the price is small, companies will continue unchanged, passing the additional expense along, slowing down the economy. If the price is large enough that other (more expensive) alternatives are cheaper, companies will switch... passing the large additional expense along, slowing down the economy even more.
  • I haven't heard of any proposed legislation for taxing the CO2 emissions of citizens. And successful cap and trade programs for other emissions have been in the U.S. for a while now(check the wikipedia Emissions trading page for examples). I'll gladly rail against any proposed legislation taxing citizens CO2 usage, but I read through these comments and I feel like I've fallen into a forest of strawmen.

    And it's fine if you don't RTFA, I mean this is /., but at least RTFS. The stated problem with the EU le
  • by TheJodster ( 212554 ) on Wednesday July 01, 2009 @05:00PM (#28549545) Homepage

    I will probably be blasted by all the environmentalists in the group, but this simply won't work. My office is two hundred feet from a coal fired power plant. They are upgrading their pollution controls right now. They are spending over $200 million on it. There is a new plant scheduled to be online in a matter of months right next to it. This is the cheapest source of power in the area. It employs hundreds of people. My company had thousands of people last year. The cost of electricity shut us down. All of my friends are sitting at home drawing unemployment. I don't know what they are going to do when their benefits are exhausted. High electricity costs will drive jobs out of America. Power is the primary cost of many manufacturing processes. All manufacturing where power is the primary driver will be done in China, Mexico, Brazil, Iceland, etc. It will be done where there are no carbon credits to buy and the environmental laws are lax. Business goes where its cheap to operate.

    You aren't saving the environment by driving out business. The president cited California as an example of good energy policy. A lot of power consumed in California comes from neighboring states that don't have such strict regulations. The government of California is broke. They may not be able to make payroll next month. Is that where we want America to go? Is that our future model?

    We are going to drive our businesses overseas. These foreign countries will build power plants to supply their new found industry. They won't care much about pollution other than to pay lip service to it. By the time we are finished cleaning up America's air, we'll all be sitting on our thumbs with no jobs lamenting our plight. On the upside, the air we are breathing during this wringing of hands and gnashing of teeth may perhaps be slightly cleaner than before. If your goal is to reverse global climate change, you are sadly mistaken if you think this will fix it. Other nations will fill in the production gaps. They don't give a crap about the environment. They want power. You gain power by having a happy, well fed, and prosperous population. This is done through industry and jobs. The pollution will simply be outsourced along with your job.

  • by Spy Handler ( 822350 ) on Wednesday July 01, 2009 @05:18PM (#28549909) Homepage Journal
    It can learn that carbon trading schemes don't work, is a drain on the economy, and only enriches a few well connected that dreamed it up... while reducing total greenhouse gases by negligible amounts to none.

    On the other hand, U.S. can also learn something useful from one of Europe's bigger countries, France: having large numbers of nuclear power plants that provide majority of your nation's electricity needs can be done, practically and safely. Of all the non-carbon-generating "green" energy schemes out there, nuclear is the only one that is practical and cost-competitive with fossil fuels on any sort of a large scale.
  • by Chas ( 5144 ) on Wednesday July 01, 2009 @05:22PM (#28549975) Homepage Journal

    SCHEME skeem

    an underhand plot; intrigue

  • 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.
  • by sampson7 ( 536545 ) on Wednesday July 01, 2009 @06:02PM (#28550579)
    This article is worthless. It ignores several critical facts: (1) the European cap-and-trade will reduce emissions over the next few years; (2) the over-allocation of initial credits is being addressed; and (3) a comparable cap-and-trade system effectively eliminated the acid rain problems in the United States due to SOx emissions in the 1990s.

    In fact, I think the European experience has been enormously beneficial.

    First, it has demonstrated that a carbon trading market can exist without bankrupting power producers or other emitters of carbon. The very fact that prices have remained manageable is critical to the fact that the power generation industry [us-cap.org] in the United States has largely supported the recent cap-and-trade legislation. (Full dislosure: I coincidently work for a company that happens to be part of USCAP, though I only work on climate change tangentially. The thoughts here are my own.)

    Second, the EU's grand experiment has created a new industry of carbon brokers who go around the world identifying and pricing potential carbon offsets. The fact that we now have some transparency and price discovery surrounding carbon offsets is a huge benefit. It also has lead to the preliminary steps for creating fungible and verifiable carbon contracts. For example, in a market-based system, a one ton reduction in carbon emissions in China should be able to fetch the same price in Europe or the United States. However, we need set metrics to verify the reduction and to avoid double counting. The European experience has given us lots of experience in what we need to do.

    Third, the European experience demonstrated the critical need to accurately quantify the carbon emitted by industry. It is no coincidence that one of the Obama administration's first actions when coming into office was to order industry to begin reporting their carbon emissions.

    Finally, we cannot miss the point that Europe is reducing its emissions. Cap-and-trade programs are designed to ratchet down emissions over time. Every year, another 2 percent of the credits just disappear. So the over-allocation may have decreased the speed at which the carbon reduction occurs, but less carbon is being emitted today.

What is algebra, exactly? Is it one of those three-cornered things? -- J.M. Barrie