Can someone explain how a cap and trade system works, and why it is a good system?
Under these carbon credit systems, isn’t it just a feel good thing? Because those who buy carbon credits are still producing too much pollution, right? They simply get to feel good about “fighting global warming”? Is that how it works?
What gets me about that is that those producing too much carbon still get to produce the pollution. How does paying somebody else for a carbon credit reduce the pollution they are so worried about?
What gets me is they want to combat gw, we have to “act now” but they don’t have a clue as to what we would do about it, other than sucking up more money for the government machine. Just like the oil crisis, the only thing they can think to do about it is tax it.
If it moves, tax it. If it keeps moving, regulate it, if it stops moving, subsidize it.
Cap and trade lets the market decide the cheapest way to reduce CO2. It is not pollution as many here have explained, only implicated in warming. Reductions in CO2 will be modest and those reductions will do nothing to change the warming. The junkscience site has a good page on this, it would take trillions to cool the world by 1 degree using the assumptions from the models. The Euros have been practicing it since 2005, and have netted good feelings and some nice government revenue, but no reductions in CO2.
I'll give it a shot:
• The government first sells licenses (yay--more "revenue" to fund bigger government! /s)I'm sure I forgot something.• The government then sets up a major bureaucracy to administer such trading scheme.
• The govenrment then sets up a slew of regulations and hires a slew of regulators to monitor, penalize, and enforce said regulations.
• After buying their license (allowing it to exist and produce), U.S. businesses are given a MANDATORY cap, based on junk science, as to how much "greenhouse gas" they are permitted to emit.
• If they find themselves unable to operate under said emission limit, they will be required to purchase a "carbon credit" from a non-emitter or pay a penalty.
• Most businesses involved in the scheme fall into two categories categories 1) those trying to actually produce something useful (the emitters) or 2) those who have been gaming the system collecting assets that qualify for "carbon credits." Many of these assets are not in the U.S.--it could be a otherwise-useless piece of land in some third-world country that they promise not to develop.
• Carbon "markets" (similar to a NYSE) are established to facilitate the trading of "carbon credits." The Chicago Climate Exchange has been established to do this already, created by Michael Milken cohort Richard Sandor who has been helping the Al Gore's and John McCain's of the world push this scam in the United States. These exchanges will create jobs for "traders" -- the traders and exchanges raking in trillions for doing nothing more than buying and selling hot air.
• U.S. businesses will now be asked to compete in a global market which they will be unable to do. They will pay extoriton money (buying carbon credits) making domestic products more expensive until it becomes obvious they can no longer be competitive. The U.S. economy will suffer and consumers, having trouble paying for the very basics, will be buying products from third-world hell-holes who aren't subject to the same strict greenhouse gas limits.
• Bottom line: This is the greatest wealth-distribution scheme ever conceived.
There are several basic ways to set up a cap and trade system: (I’ll use very simplified examples, there are thousands of tiny details and loopholes in the actual rules.)
Cap and Trade: In a cap and trade system, companies tell the government how much they have polluted in the past and the government gives them credits for free. The credits are good for a year. For example, if a refinery has emitted 100 tons per year in the past, they will get 100 credits as a starting point for 2008. When the credits expire at the end of the year, the government will hand out more credits, but instead of 100 credits, they will only give the refinery 90. The refinery can decide whether to upgrade their equipment to keep their emissions under 90 tons/year, or they can buy credits from someone else in the same the regional area who has already upgraded and has extra credits to sell. The entire system is limited to the geographic region with the pollution problems. The government keeps everyone honest by making them report their actual emissions and show that they polluted less than their credit limit. This system is used in Texas and other places for NOX (oxides of nitrogen), and it’s not bad. It isn’t perfect, but if there is a real pollution problem, it’s the best way to go. Of course, CO2 isn’t a pollution problem in my opinion.
Cap and Auction: In a cap and auction system, the government offers the credits for sale to the public rather than giving them out for free. The government keeps the money of course. The cap and auction systems I’ve heard about won’t be regional or limited to just industry. So another problem is that Sierra Club or Earth First or George Soros or China can buy the credits and take them off the market and drive the costs up much faster. I think it would create a situation where it would be impossible for companies to comply, it would end up in court, and it just wouldn’t work. I don’t know if this is actually being done anywhere, but I’ve heard it being talked about as a greenhouse gas cap and trade system. It would be very bad.
Carbon Offset: The stupid Al Gore carbon offset system doesn’t deal with ACTUAL emissions reductions, instead, the credits are for projects that offset other emissions. For example, credits would be given for building a wind turbine, which would theoretically replace 1/1000th of a coal plant. The problem is that the coal plant keeps on polluting just like before and there are no verifiable actual reductions in emissions. Carbon offsets are sort of like building a brand spanking new house with all “green” products, and saying you are reducing your footprint on the earth (even though you obviously would have polluted even less if you had just stayed in your old house). And some of the projects aren’t even really projects: My favorite is the “avoided deforestation” projects. The carbon offset system is just a scam.
There are a lot of variations, but I don’t think most people understand the differences between the systems, and I think politicians might try to sell cap and auction like it’s cap and trade because they will rake in the money to the government. We need to be watching them.