Category Archives: carbon trading

NYTimes: Earth’s Climate Needs the Help of Incentives

Global warming, or climate change, sure seems to have hit the big stage. From emmys for Gore to a whole list of legislation moving through the beaurocratic process, we hear and read about this issue every day. But what should we actually do? The next issue to tackle is the immediacy and magnitude of the problem. Do we need a complete overhaul of our lifestyles, or should we baby-step our way to a solution with trial and error?

No wonder, then, that the political debate now revolves around what that action should be. In the current Congress, there are six bills to deal with climate change, and more are on the way.

This attention certainly qualifies as progress. But it is also creating the newest big obstacle to a climate solution, an obstacle that’s far less obvious than the efforts to deny scientific reality. The would-be reformers may be saying all the right things; every last one of them may even be pursuing the solution she or he honestly believes to be the best one.

The only reliable way to reduce carbon emissions is to make them more expensive. When you hear somebody talk first about doing this and only then about the wonderful innovations that will follow — and they will follow — you know that person is serious.


Cap, don’t trade.

The shortcomings of current carbon trading systems are clear. As a piece in Newsweek concluded, “So far, the real winners in emissions trading have been polluting factory owners who can sell menial cuts for massive profits and the brokers who pocket fees each time a company buys or sells the right to pollute.”

Currently, the link between the purchase of carbon offsets and the actual reduction of carbon emissions is highly controversial and almost impossible to verify. The process is easily manipulated. Measurement tools are remarkably primitive. Even the most basic calculations are subject to wide variations….In other words, the system is new. As with all new systems, carbon offset trading is working out the kinks. Carbon trading 2.0 will be much better than carbon trading 1.0. Give it a chance.

I disagree. Carbon trading is not a promising strategy. Its costs outweigh its benefits. We don’t need carbon trading to reduce carbon emissions. Indeed, it is likely that we will reduce carbon emissions much more without carbon trading.

Unfortunately, policymakers and environmentalists have all but wielded together the words, “cap” and “trade.” They talk as if a cap cannot exist without a trading mechanism. That’s not true. We can have caps without trade.

We should impose an immediate moratorium on carbon trading while imposing ever-more rigorous carbon caps. And stop the use of long-distance offsets. All offsets should be local or regional.