No kidding, Trouble with Carbon Cap-and-Trade Markets, Who Would Have Guessed

The New York Times reports today of trouble with markets for trading carbon. In a race to placate industry, the European carbon market experience raises suspicion on cap-and-trade schemes. I believe and I think the majority feel [won’t publicly admit] that the only real way to reduce greenhouse gases is to structure a Btu tax. The dreaded Btu tax.

There is so much interference and diversion away from carbon facts. For instance, proponents of cap-and-trade point to the success of SOx pollution trading schemes as a reason why this would work for carbon. Well, not so fast as these are totally different compounds. Carbon dioxide emissions are pervasive in the environment and are not isolated to SOx emitters.

One glaring example is the use of natural gas, which produces lots of power and that does not have sulfur or SOx, but lots of fossil fuel CO2 emissions. See the point.

Other real problems with cap-and-trade is the uncertainty in the price and the legitimacy of carbon offset programs. How does one protect against huge historical price swings and validate or even audit CO2 offset claims. Who is ultimately responsible if these offset are fraudulent credits being sold by manipulators?

A cap-and-trade sounds like a compromise but it is just another head fake on the public. A Btu tax, although politically more difficult, creates market certainty and eliminates these loopholes and potential for manipulations. A tax, of course, would disappoint financial institutions, attorneys and environmental groups that were anxious to capitalize on a new global trading scheme. Oh well!