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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."
So pay a uniform "pre-bate" [1]to everyone equal to the "energy tax" they would pay if their income were x% of the poverty level. (Again, that's a uniform prebate to all adults, with no means-testing.)
Then, the only people whose *net* taxes go up are the ones making above the poverty level and don't reduce energy use. And the poor's taxes (by whatever definition you use for x) don't change. And it retains the incentive for everyone, including the poor, to cut back whatever energy consumption they can.
[1] For those of you with low intelligence or born before 1960, read that as "Mail a check".
Information theory is life. The rest is just the KL divergence.
This is only dealing with the symptoms, just like any other environmental protection scheme.
There is only ONE environmental problem, which is the root cause for all other environmental issues. Solve that problem and all others will automatically disappear.
That problem is overpopulation. massive overpopulation.
Please go on ignoring the problem while jumping to the conclusion I want to kill 95% of the population, probably applying some eugenics on the way, and mod me -1, Nazi .
Matt Taibbi, in his article The Great American Bubble Machine, asserts that the next bubble will be the carbon trading scheme. Perhaps that's how the Government and Wall Street plan on keeping carbon credits artificially high. That is until the bubble bursts and they raid our tax dollar barrel... again.
http://www.correntewire.com/great_american_bubble_machine_0
FTA:
The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.
Here's how it works: If the bill passes; there will be limits for coal plants, utilities, natural-gas distributors and numerous other industries on the amount of carbon emissions (a.k.a. greenhouse gases) they can produce per year. If the companies go over their allotment, they will be able to buy "allocations" or credits from other companies that have managed to produce fewer emissions. President Obama conservatively estimates that about $646 billions worth of carbon credits will be auctioned in the first seven years; one of his top economic aides speculates that the real number might be twice or even three times that amount.
The feature of this plan that has special appeal to speculators is that the "cap" on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. Which means that this is a brand-new commodities market where the main commodity to be traded is guaranteed to rise in price over time. The volume of this new market will be upwards of a trillion dollars annually; for comparison's sake, the annual combined revenues of an electricity suppliers in the U.S. total $320 billion.
Goldman wants this bill.
It would work fine if the tax were progressive, but if the assumption is that the burden on a poor person is the same as the burden on a rich person, then "prebating" enough that the poor guy's net tax is 0 means everyone's net tax is 0.
Not sure I understand. My solution was just prebating energy taxes, and I mean the net tax *change* is zero, and if you base it on poverty level energy spending, that makes it progressive. Because you net change in taxes (if they go up) is equal to the tax you pay on each unit of energy you consume *above* the poverty level energy consumption.
In other words, if E is the cost of the energy concent of goods you consume, and t is the effective tax on energy, and P is the poverty level spending on energy, and R is the Rebate, your net change in taxes is:
E*t - P*t
or, t*(E-P).
1) How will you calculate the amount of this "prebate"? Will it be figured "per man woman or child" in line with the article's assumptions? How much per? How will ou even begin to estimate this?
Yes, great concerns, all, but you're changing the topic. The original concern was "but this will hurt the poor". Fine. There are trivial ways to remove this unpleasant aspect without fundamentally changing the plan or its incentives on any marginal unit of fossil fuels. I just explained how.
2) How will you fund the "prebate"?
From the auction revenues.
Information theory is life. The rest is just the KL divergence.