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What the US Can Learn From Europe's Pollution Credit System
Al writes "Technology Review discusses what a US carbon trading scheme could learn from the flawed European experience. Advocates of carbon-trading schemes like to point to Europe's cap-and-trade program as a model worthy of emulation, but the reality has been less than perfect. A glut of pollution credits, distributed without cost during both the first, transitional phase of the program and the current working phase, drove down the value of the EUAs. As a result, Europe's carbon dioxide emissions remain priced well below 20 euros per ton. With the price of pollution so low, economists say, industries that generate and consume energy have no incentives to change their habits; it is still cheaper to use fossil fuels than to switch to technologies that pollute less. Establishing a carbon price in the US system now, and tightening the system later, could send a dangerously wrong signal to financial markets looking to invest in new energy technologies."
As this article points out (with a nice graph), the market has recovered from its initial missteps. Carbon emissions have been trending down (even before the mega-recession began), and Europe is on track to meet the Kyoto requirements (8+% below 1990 levels) by 2011. The major problems had to do with a lack of data about how much carbon the European countries were emitting. Therefore the cap was set too high. There have been several adjustments since then, and the results have become much better.
One hopes that we'll be able to avoid this, since we have much better emissions data. To my mind, the most important finding of the post above is that corporations are finding massive improvements in efficiency, since the cap has essentially set a price on emitting carbon. This, plus technological development, is going to make the problem a lot less scary than conservative estimates would have you believe.
(Now there are various caveats. The really big one being the ability of nations to "outsource" their emissions by importing from nations with no such caps. But I don't think this is an argument for removing the caps --- rather, we should be finding ways to integrate the trading schemes of those nations with caps, and recover some of the carbon cost on imports from the other nations.)
The cap and trade bill that just passed the house will simply drive all of the industry further to China and the third world where there are scant environmental regulations.
It was really scary watching C-span on Friday where every Democrat talked about how this bill will create jobs and save the planet. That isn't an exaggeration in the least. Then the Republicans would speak and quote from all of the studies showing how it will destroy jobs and our econonmy. Now that the Republicans aren't in power they are allowed to use some sense.
It was very funny how last Tuesday the bill was at 300 pages then on Friday it became up to 1500 pages and then down to 1200 something pages. It was simply impossible for anyone to have read it, let alone comprehend it.
From what I've read of the bill it sounds a lot like the system put in Spain which isn't doing wonders for their economy and also sounds like Agenda 21 of the UN.
Essentially we are screwed. It doesn't matter who you vote for or what ideology you are, unless you're in the big club your face is being stomped on right now.
If you have something that you dont want anyone to know, maybe you shouldnt be doing it in the first place -Eric Schmidt
...is that it's not progressive. So Joe Sixpack bears a much higher load in proportion to, say, Al Gore
Whether a Cap & Trade scheme is progressive depends entirely on how you give out the emissions permits. Auction them off and rebate the proceeds to the taxpayer (even if it's a flat check to every American), you have an enormously progressive plan.** Give them away and you have a regressive plan.
Now if you want a progressive version, contact your member of Congress and tell them to support that. Unfortunately, the regressive version seems to be what the most conservative members of Congress want, and since the Republicans are opposing anything, then that's probably what we'll get. It's still better than nothing, and if you want better, then stop concern trolling about it and start voting for more progressive Congresspeople.
** Citation, from the CBO analysis. Sadly I have to give the graph excerpted on this blog page, since I didn't have time to hunt for the original: http://yglesias.thinkprogress.org/archives/2009/04/making_cap_and_trade_regressive.php).
Even as Democrats have promised that this cap-and-trade legislation won't pinch wallets, behind the scenes they've acknowledged the energy price tsunami that is coming. During the brief few days in which the bill was debated in the House Energy Committee, Republicans offered three amendments: one to suspend the program if gas hit $5 a gallon; one to suspend the program if electricity prices rose 10% over 2009; and one to suspend the program if unemployment rates hit 15%. Democrats defeated all of them.
-Wall Street Journal
In Spain every "green" job created came at the cost of 2.2 "regular" jobs lost.