Thursday, July 22, 2010

Cap and trade seems too hokey to be truly viable

Schemes for emissions trading such as cap and trade have been around for awhile and thought out rather rigorously, but the bottom line for me is that the entire concept still seems too hokey and too much of a gimmick to be truly viable for dramatically lowering emissions. The bottom line is that if it is really as simple and easy as its proponents suggest, then it really does fall in the category of "If it sounds too good to be true, it probably isn't true." I personally am all in favor of improving energy technology, enhancing air quality to reduce negative health impacts, improving energy efficiency, reducing energy costs, and generally reducing our environmental footprint, but cap and trade just doesn't seem to "click" for me. I am not sure exactly why, but that's the way it is. The bottom line is that if the proponents of cap and trade want my support, they are going to be a lot more forthright and transparent about the "fine print" of cap and trade and what its potential downsides really are.

Just the "cute" title of "cap and trade" causes a red flag in my mind. It smacks of "bait and switch." Sign up for "cap and trade" and who knows what you will really get five or ten or twenty years down the road.

It even reminds me of the old street scam here in New York City, "Three-card Monte", which was once played with cards and then switched to plastic bottle caps and a bean. Around and around the carbon credits flow, where they stop and who ends up holding the bag is unclear.

Maybe that is the real point: Cap and trade sounds as if it is all cheap and easy and nobody is really paying much at all for any or all of it, when reality tells us that ultimately somebody or a big collection of somebody's will have to pay an arm and a leg to wean ourselves off traditional fossil fuels. To me, cap and trade is basically a fraud, a scam.

My preference, over cap and trade, is to just ride the technology curve and focus on assuring that there is a large enough pool of capital for both private and public technology development and a sufficiently light rein on government over-regulation so that a partnership of the public and private sectors can push hard and fast enough on that technology curve to actually deliver on the instant gratification that cap and trade purports to promise us. Another tool is to specifically target a quota of government energy and transportation usage every year for new technology, even if it happens that it is less economical in the short run, since such a subsidy can have a long run advantage by seeding nascent markets for new technology.

There are plenty of potential strategies for achieving greener energy technologies, but cap and trade is not one of them. Just say "No" to such gimmicks, and that includes carbon credits and carbon taxes.

-- Jack Krupansky

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