Monday, January 26, 2009

Cap n trade

Gripped by the coldest winter in twenty years, combined with suddenly affordable, bountiful supplies of petroleum (whatever happened to the energy crisis?), all the while being mired in the worst recession in living memory, the subject of global warming has, not surprisingly, faded into the background at least for now. Being environmentally responsible is one of those things the middle classes like to do when they can afford to; it's a luxury to indulge in to partially assuage the guilt over all that conspicuous consumption. Being organic is another fun thing to do if you have the loot, otherwise Hormel canned spam is just great. So much for organic farming as the new paradigm for feeding the world.

So, it is encouraging to read that, in the new Camelot, the plans to limit carbon emissions discussed in the campaign are still going ahead. The argument, correctly, is that this will motivate a clean energy economy by encouraging investment in and development of alternative energy sources. Without financial incentives it cannot happen.

The favoured approach is the "cap and trade," as opposed to a direct carbon tax, although in effect it acts as a tax on the excessive carbon producers. The financial incentive to reduce emissions is the avoidance of having to pay to buy the permits to emit above the limit. Those that emit below the limit will be able to sell the difference. In theory I suppose it all evens out with the net result of there being lower emissions. I'm a little skeptical, but the system worked for acid rain emissions from power plants (I think), so why not here?

Opponents are concerned that the scheme will ultimately increase the price of energy and hurt economic recovery and increase costs for the people. Therein lies the rub: the clash of sustainability and economic growth. It cannot any longer be acceptable to strip mine resources irresponsibly without paying their true cost. The true cost of buying petrol must include some kind of compensation for its replacement. What we were paying back in the giddy days of summer is probably much closer to a true cost, though probably even then lower than is realistic, than what we are paying now.

1 comment:

Anonymous said...

There will be pain, likely for an extended period, no matter what route is settled upon. Hopefully, a longer-term perspective for "fueling" the future security of our planet will prevail.

On a related topic, what does the professor think of proposals for taxing miles traveled by GPS-monitored vehicles (such a test trial I believe is planned in the state of Oregon) as a way of funding highway maintenance, with revenue from gasoline taxes eventually going the way of the dinosaur in the hybrid or all-electric future?