The Economist newspaper, long known for its progressive libertarian stance on everything from stem cell research to executive compensation, this week implicitly admitted that cap-and-trade is the preferable of many difficult-to-swallow options in the arena of potential US climate change legislation. It points to research that shows a cost of $69 to $137 per ton of carbon emissions reduced through the approaches funded by the American Recovery and Reinvestment Act (ARRA), "the stimulus bill". In contrast, it cites PointCarbon research indicating that a cap-and-trade approach will reduce emissions at a much more affordable $13 per ton.
In its briefing "Sins of emission" in the 14 March 2009 US print edition (page 26), the paper lays out both the perils and advantages of cap-and-trade policy as implemented in Europe and presently being discussed in the US Congress.
Among the political challenges to cap-and-trade, the paper highlights, are the strong opposition from highly coal-dependent midwestern states, the economic impacts of higher energy prices to consumers and businesses, and the volatility of carbon markets. (Europe's has seen 300% price swings since 2005).
Despite the criticism of cap-and-trade, and after a passing mention of the newspaper's ideal approach, a carbon tax, the paper focuses its attention on explaining why direct government intervention, highlighted in the stimulus bill in the form of credits and tax breaks for renewable power and smart grid build-out, is redundant with, and damaging to, cap-and-trade policy.
The paper concludes with a warning to those promoting renewable portfolio standards (RPS) and similar governmental micromanagement techniques:
If you're interested in climate change policy, I highly recommend reading what The Economist has to say.
Links to articles at Economist.com:
Briefing: Sins of emission
"Barack Obama is keen to curb greenhouse-gas emissions with a cap-and-trade scheme. Can Congress come round to his way of thinking?"
http://www.economist.com/displaystory.cfm?story_id=13272099
Leader: Cap and binge
"America's politicians are at last getting to grips with global warming, but in a dangerously expensive way"
http://www.economist.com/opinion/displaystory.cfm?story_id=13278201
In its briefing "Sins of emission" in the 14 March 2009 US print edition (page 26), the paper lays out both the perils and advantages of cap-and-trade policy as implemented in Europe and presently being discussed in the US Congress.
Among the political challenges to cap-and-trade, the paper highlights, are the strong opposition from highly coal-dependent midwestern states, the economic impacts of higher energy prices to consumers and businesses, and the volatility of carbon markets. (Europe's has seen 300% price swings since 2005).
Despite the criticism of cap-and-trade, and after a passing mention of the newspaper's ideal approach, a carbon tax, the paper focuses its attention on explaining why direct government intervention, highlighted in the stimulus bill in the form of credits and tax breaks for renewable power and smart grid build-out, is redundant with, and damaging to, cap-and-trade policy.
The paper concludes with a warning to those promoting renewable portfolio standards (RPS) and similar governmental micromanagement techniques:
Congress is unlikely to swallow the castor oil of cap-and-trade without such sweeteners, Washingtonians say. But the more lavish the subsidies, the more expensive cutting emissions becomes--and the harder for voters to stomach.
If you're interested in climate change policy, I highly recommend reading what The Economist has to say.
Links to articles at Economist.com:
Briefing: Sins of emission
"Barack Obama is keen to curb greenhouse-gas emissions with a cap-and-trade scheme. Can Congress come round to his way of thinking?"
http://www.economist.com/displaystory.cfm?story_id=13272099
Leader: Cap and binge
"America's politicians are at last getting to grips with global warming, but in a dangerously expensive way"
http://www.economist.com/opinion/displaystory.cfm?story_id=13278201
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