Duke Energy’s CEO is already on the stump against an auction for carbon credits in a cap and trade system. The energy exec. says that it would increase the price of energy by 40% in some states. What’s his alternative? Obama should give them away for free. If carbon credits are auctioned off, then Rogers says it is nothing more than a carbon tax.
Here’s the problem: Europe initially gave away its carbon credits also. Then companies began selling them just to generate another cash flow, which flooded the market and crushed the price. We expect we’ll hear a bunch of energy company executives and the Senators from their states complain about the idea of auctioning off the credits. Obama anticipated these cries and created his budget so that the revenue from cap and trade goes to middle and lower income people.
It looks like it doesn’t matter. For the next year or so, we’re going to hear a lot of public carping about the dangers of charging for carbon credits. We would consider it unwise to give away the permits. Free permits don’t exactly induce anything to change their behaviour, which is the ultimate goal of a cap and trade system.
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