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This discussion relates to Technology Review's article The Real Price of Obama's Cap-and-Trade Plan .

Discussions: Business: The Real Price of Obama's Cap-and-Trade Plan

neeil

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03/04/2009 01:18 AM
Hopelessly biased article

Of course it costs money to reduce pollution and carbon emissions. There's no free lunch.

But the article makes it sound as though this is a surprise. There's a price!! Man, there's always a price.

Virtually all economists agree that a cap-and-trade scheme costs us all less than simple caps to achieve the same results. The real cost of Obama's cap-and-trade plan is less than the cost of the alternatives. That's what the article should be saying.
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- colinnwn
  
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  03/04/2009 11:37 AM
  Re: really biased?
  
  I'm for cap and trade and I didn't think it was biased, it simply said prices will rise, as they should. Right now we are getting a free lunch because we can emit as much CO2 as we want and don't have to pay financially immediately for the negative consequences.
  
  One leading Economist recently panned cap and trade, saying we instead should implement a carbon tax. Emit as much CO2 as you want, just pay the gov for the privilege who will later be responsible for managing all the negative implications. You can then year over year adjust the tax to get to the desired level of total CO2 emissions. I tend to think this would be a more efficient method also.
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  - jamesnach
    
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    03/04/2009 12:04 PM
    Re: really biased?
    
    there are pros and cons for both solutions: you can take a look here (http://whatmatters.mckinseydigital.com/the_debate_zone/carbon-tax-vs-cap-and-trade) for a useful comparison
    
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  - Siphon
    
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    03/17/2009 07:14 AM
    Re: really biased?
    
    I agree that carbon taxes are better suited for the job. The only real advantage for carbon trading is that it reduces the marginal abatement cost (by optimizing it) slightly better but it's a small benefit overall. The downside over a simple tax is huge: speculation. Creating a volatile carbon market on top of volatile fossil energy markets is seriously damaging for strategic investments in alternative energy, as well as efficiency and even conservation. Unfortunately, the political force is behind trading, rather than the more transparent and therefore less risky tax system. I think what's politically attractive about the trading system is that the cap is an ostensibly concrete target, so politicians can sell this as solid policy.
    
    A tax is the simplest and most efficient approach in practice. CO2 has a societal cost. Tax the CO2 according to societal cost. = Pigouvian tax rate. Internalize externalities. It's all about giving the right price signal to markets, and then making sure that other market failures are also reduced (eg clearly defined property rights, improved information and transparency in markets etc). This isn't as easy as it sounds though, because estimates of the social costs of carbon (per ton carbon or CO2) vary greatly. IMHO, just pick a conservative lower end value to start with, and as scientific certainty increases, and more CO2 is emitted, the tax will naturally go up.
    
    Sadly, it appears that the average joe doesn't read elementary environmental economics textbooks. But a carbon trading system is still better than doing nothing, so at least there's some progress.
    
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kitk

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03/04/2009 01:30 AM
Mo' Money from Us!

In other words, a breathing tax. This should be from a Mel Brooks comedy, not actualy government. With more and more scientists coming out AGAINST blaming CO2 as a pollutant or villain, here come the politicos figuring to tax us on something we exhale. Clearly they fail to know that we are short on money ourselves, the taxpayers, and this will only hurt business and industry. Make no mistake, this is just another way to tax us.
Now what I would like to see is a tax on all those activists who are causing the rest of us to pay more for unfounded complaints.
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- d3v4n5
  
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  03/04/2009 03:24 AM
  Re: Mo' Money from Us!
  
  kitk, any chance you could post some links to these scientific reports you're referring to?
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jamesnach

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03/04/2009 04:13 AM
no surprise

costs will increase?
yes and no.

yes they will increase, but just because today noboday pays for polluting air: much easier, isn't it?

costs will likely increase: that's what happens when you "internalize" in the economic system externalities, previously not considered by anyone
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robert.hargraves

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03/04/2009 06:10 AM
Energy cheaper than from coal

Coal power plant emissions are the major source of atmospheric CO2. A technology to produce energy cheaper than from coal will provide all the economic incentives needed to check these emissions, not just in the US and Europe, but in China, India, and other developing nations that will never accept carbon taxes nor cap and trade restrictions on their economic growth ambitions.

A tutorial introduction to the liquid fluoride thorium reactor is at
http://rethinkingnuclearpower.googlepages.com/aimhigh
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adude

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03/04/2009 09:33 AM
A Whole Lot of Waste

Considering that there hasn't been any warming in ten years, that some forecasts show a cooling trend for at least the next decade, that Europe's cap and trade scheme did not reduce C02 and has instead seriously impacted there competitiveness in the world market and most importantly unless India and China sign on nothing that we do will affect global warming in the slightest, the proposed plan by Obama will just be a huge tax on all of us for no good reason.
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- jamesnach
  
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  03/04/2009 10:05 AM
  Re: A Whole Lot of Waste
  
  i. "Considering that there hasn't been any warming in ten years"
  
  To tell the truth, it's exactly the opposite.
  
  http://epa.gov/climatechange/science/recenttc.html
  
  " * Since the mid 1970s, the average surface temperature has warmed about 1°F.
  * The Earth’s surface is currently warming at a rate of about 0.32ºF/decade or 3.2°F/century.
  * The eight warmest years on record (since 1850) have all occurred since 1998, with the warmest year being 2005."
  
  ii. "that Europe's cap and trade scheme did not reduce C02"
  
  it doesn't seem so:
  http://greeninc.blogs.nytimes.com/2009/02/16/group-says-european-cap-and-trade-system-reduced-emissions/
  
  "the largest cause of a reduction in emissions in the European Union last year was attributable to the trading system"
  
  iii. "India and China sign on nothing that we do will affect global warming in the slightest"
  
  China and India will follow, China is already following, take a look at what's happening in the renewable industry and in the electric car sector.
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  - Scottar
    
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    03/08/2009 04:39 PM
    Re: A Whole Lot of Waste
    
    James:
    
    Your reading hype and old data. For the real deal on the speal for the rest of the story visit:
    
    www.icecap.us
    
    The temps have been dropping along with sea levels. Sea ice has returned to 1979 levels. The IPCC bases it's predictions mostly on sexed-up climate models that don't mirror real conditions.
    
    The climate gravy train is the real motivation behind this global warming hysteria along with eco-green fanaticism.
    
    Obama is just another socialist Marxist with new packaging.
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