It’s becoming more and more evident that the nation is on a crash course towards implementing a cap and trade system to reduce carbon emissions.
Stop! says Tom Friedman in a op-ed for the New York Times. Friedman makes a simple but compelling argument against cap and trade. He says a tax will be more easily passed because more people will understand it.
NYT: Americans will be willing to pay a tax for their children to be less threatened, breathe cleaner air and live in a more sustainable world with a stronger America. They are much less likely to support a firm in London trading offsets from an electric bill in Boston with a derivatives firm in New York in order to help fund an aluminium smelter in Beijing, which is what cap-and-trade is all about. People won’t support what they can’t explain.
What he says makes sense. If the government just says, “We’re going to tax emissions at $10 per ton,” then the effect is the same as a cap and trade system. The upshot is that a new shadowy market isn’t created where crazy derviatives are traded.
The downside is that it creates a cap and trade like system pricing carbon, but the price is rigid and only goes into the government’s coffers. Depending on how you feel about markets, cap and trade is a good thing, as it creates a new market for trading carbon, and thus creates an entirely new industry.
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