Cap and Trade vs. Carbon tax

by Ginosar  

From a political point of view, many say, there is no way to legislate a carbon tax in the USA. Most businesses want cap & trade to allow them to continue to emit greenhouse gases as long as they can at the  minimum cost. And Congress obviously is highly "influenced" by the business lobby. Money speaks lauder than reality in Congress.


We continue to lie to ourselves, and most of the environmental movement is keeping quiet about this issue. But it is bigger than C&T, it is fiction vs., Nature.


It is obvious that carbon tax is a much superior approach to cutting GHG. But it will force the fossil fuel industry and the electric power industry to change their customary ways of large GHG emission, and will reduce their profits. And the financial sector will not be able to speculate profitably with C&T permits. So they all oppose it vigorously.


Lets' summarize the differences: (Good info in Harper Feb. issue by Mark Shapiro)

The superiority of carbon tax is that it is more accurate means of cutting GHG.

It is easier to tax, easier to monitor, and harder to evade. As a result it is easier and faster to implement, requires relatively low administration, and thus less costly to the economy.

In short, you know what you are dealing with, and you can achieve the results our nation needs.


Cap & Trade has all the opposite characteristics: It is considerably more complex, by at least ten to one, very harder to monitor, easier to falsify data- to claim you did more than you actually achieve. And since C&T is very hard to monitor it will NOT cut GHG by the amount expected. Studies of the European experience indicated that the claims were some 30% higher than the real cuts in GHG. It is clear that if businesses will find any loopholes, they will use them extensively: less cuts in GHG, higher cost to the public.


And one of the most appealing aspects to the financial sector of C&T is a very big and hugely profitable financial trading in C&T Permits and Futures. It is estimated to be in the many trillions dollar range - much larger than the recent financial speculation that brought us to the current global economic near-collapse.


The pressure by the all powerful financial industry in the US may be the largest forcing element in the C&T picture. When they are expecting profits in hundreds of billions, no limit is set on their lobbying. The financial sector- now a powerful 20% of our total US economy, has immensely powerful political influence that the environmental sector is unable to comprehend. The financial sector controls our country more than any other sector since it is the largest sector, and the one with the most amount of ready lobbying cash. And the one with a very low morality. (see the recent PBS exposition of the banking industry).


Now add to the above that the IPCC underestimated the speed of global warming, and that we must add a safety factor to the needed reductions- we do not have neither time to delay action and we should not tolerate half measures. Nature does not care about our political games.


And that is what I am leading to; Our country is governed to a large extent by the laws Congress pass. Even the president has limited ability to influence Congress. And it is obvious that Congress is unable to function in the interest of the nation. Congress does not want to do what the country needs - curtail the rise in GHG emission. (Obviously some Congresspersons are much better than others, but the majority rule.)


We need true leadership and we do not have any now: Leadership means willingness to risk, willingness to put the national interest above your own.

As long as Congress does not face the reality of its actions, the reality of nature, as long as Congress continues to mislead itself and believes in convoluted ways represented by Cap and Trade, there is very little likelihood that the US will cut its GHG emissions by the required amount to limit the expected rise in global temperature. We must set a realistic example to the developing world.


 

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