Burning one of my Penguin candles
Holidays at Kahneeta
We had a wonderful couple of days at Kahneeta. Snowball fights, hot springs, rolling in the snow, good food, Wii games, and good movies.
Against ‘Cap and Trade’ Carbon Emission Schemes
The real purpose of "cap and trade" schemes is to make greenhouse emissions standards ('caps') more palatable to profitable, politically influential polluters by giving them a way to avoid changing for as long as possible ('trades'). A simple carbon tax, with tax credits for conversion to cleaner technology, up would be much more effective.
Because we're talking about the intersection of money and pollution, these schemes place businesses in one of four categories based on their profit margin and greenhouse emissions. By looking at the four types of companies, we can see their likely response to a cap and trade system as they pursue profits under the constraints of the system.
| Under Cap | Over Cap | |
|---|---|---|
| Profitable Company |
|
|
| Struggling Company |
|
|
We can see that the plan is good for clean companies. They can sell credits to polluters. For these companies, there is no incentive to reduce emissions until the cap reductions affect them. In fact, the option to sell credits is a government subsidy to these types of companies born by taxpayers as an opportunity cost. Since any level of greenhouse emissions are dangerous, and the effects of pollution are born by taxpayers, taxpayers are paying companies under the cap to pollute. However, as the standards get tighter, these companies will be forced to the right.
For companies that are over the cap, there are two types. Companies that cannot afford carbon credits will go out of business. Good, less polluters, right? But are we sure these are the businesses we want to shut down? This outcome hasn't been arrived at by an analysis of other environmental impacts of the company - just the face that they are polluters now, can't afford to retool, and can't afford carbon credits. An environmental and social problem has been answered through a financial / market process.
On the other hand, very profitable companies buy credits and continue to pollute. They only have to buy enough credits to cover their pollution over the cap, and they can afford to. They prolong retooling for fewer emissions, instead investing in carbon credits as long as possible. After all, company wouldn't buy the emissions credits unless it was a good investment - meaning, the result of polluting behavior is net profitable even with the cost of credits, and this investment opportunity is brought to them by the largess of the taxpayer, again in opportunity costs for repayment of the impact of the emissions. We have given them a perverse incentive to pollute as long as possible.
An emissions tax with retooling credits, only the other hand, is a simpler and more effective solution. Because all emissions are harmful, not just those coming from the portion over the cap from companies who total emissions are over the cap, all emissions should be taxed. The incentive to clean up is spread evenly on companies regardless of how much money they make. Some companies will, and should, go out of business, but those companies are more likely to be the biggest polluters, rather than polluters who happen to be in low-margin businesses. Tax credits should be made available to companies that invest to reduce their emissions.
Finally, cap and trade represents the rhetoric of the past where free markets are assumed to be the answer to the every problem. We have seen that markets do not encourage forward thinking long term solutions, but rather profit maximization for the increment of time between now and the next bonus.
With what we know, relying on companies to act responsibly is irresponsible.
Bill Bradbury on Climate Change
I had the opportunity to see Bill Bradbury, the outgoing Oregon secretary of state, deliver a presentation on climate change today at Celilo Media, the publishers of the Chinook Book and Ecometro blog. My friend Carissa, the Ecometro blog editor, invited me because they had extra spots. Bradbury had attended a training session at Al Gore's Tennessee farm, where Gore, in the family barn, trains large groups of people to deliver the same speech on climate change that became the basis of the movie An Inconvenient Truth. Bradbury adapted the presentation to an Oregon audience with before and after photographs of the glacier on Mt Hood, the newly forming delta at the outlet of Hood River into the Columbia, and images of floods and landslides created by melting glaciers. He did a great job, and the intended effect - making me want to do something - definitely worked.
I had the good luck to see Gore give his original presentation at the Oregon Convention Center in September of 2005, before the movie came out. Gore gave the presentation twice in a row because of the large number of people who couldn't get it to see the first presentation. It was shocking then, and things have gotten even worse in the last few years. The ice caps have been melting faster than anyone predicted, and the unusually hot years have continued - of the hottest ten years on record, 9 of them have occurred within the past ten years. Since I saw the presentation, Australia signed the Kyoto Protocol, leaving the USA the only industrialized nation to not sign it.
Another, more welcome addition to the presentation was a short clip from Barack Obama about climate change being a huge priority for his administration. I am sure he will push signing the treaty though Congress, and I hope the minority Republicans don't block it.
Bill had mentioned Cap and Trade schemes as a solution to the problem. I asked Bill if he thought they were a viable method of controlling greenhouse emissions, and isn't there an inherent compromise built into the idea. He responded that he did not see the compromise, and thought they were a good way to control emissions since they would bring down the average amount of greenhouse emissions. I said that, if the system was meant to distribute the pain of compliance fairly across businesses in the economy, that it didn't make sense, because the most profitable companies would continue to pollute, while the stated goal of making the transition easier would only be true for companies that can afford to buy carbon credits from less polluting companies. I agree with the 'cap' part, just not the 'trade'. Someone else suggested a carbon tax, and the Secretary admitted that was anther viable approach, but was unpalatable to voters. Frankly, after the shocking evidence he had just presented, that's not a good enough reason to compromise on solutions.
I probably didn't make as good an argument as I could have to go head to head with the Secretary of State on his favorite issue, so I'll do it here n my blog. Read Against Cap and Trade Carbon Trading Schemes here.
