CO2 emissions have no value in exchange other than that imposed by fiat - exactly as with conventional "money as debt".
The energy value of carbon on the other hand is exchanged millions of times a day for money, and all such transactions are currently captured, albeit in a fragmented way.
Value in exchange is what markets are about and I believe I'm proposing a workable one, whereas TBG pithily pointed out the problems implicit in taking emissions trading to a "retail" level.
I see no evidence that the existing and proposed market architecture could ever achieve its professed aim of cutting emissions, but I do see it as achieving the aim of those who developed and promoted it to enrich themselves.
Jerome a Paris:
We need to make people pay the price for creating a negative externality in the form of additional carbon in the atmosphere. There is value there, and a simple case to be made to put a price on it in order to get people to "increase value", ie to reduce carbon emissions. I fail to see how this is different from your scheme, altogether.
We need to make people pay the price for creating a negative externality in the form of additional carbon in the atmosphere. There is value there, and a simple case to be made to put a price on it in order to get people to "increase value", ie to reduce carbon emissions.
I fail to see how this is different from your scheme, altogether.
The mechanism I advocate gets a handle on value (by essentially monetising energy value) in a way which emissions trading can never do.
You advocate "putting a price" on emissions - a purely political act.
I advocate a compulsory carbon levy, collected at the clearing level, and therefore inescapable. The funds collected go into a "Pool" which is then "unitised" into "Units" which are redeemable either against renewable energy actually consumed, or in payment of "energy investments" advanced to pay for energy efficiency projects.
This Pool is invested in suitably appraised projects for both MegaWatts (eg off shore wind) and Negawatts eg retrofitted CHP - which as William Orchard points out on Claverton is far and away the most cost effective mechanism there is.
Either way, the skills of experts like you would be needed to decide which projects stack up and deploy the necessary investment form the Pool.
The "Units" in the Pool would essentially be "Carbon Dollars" redeemable against something of value ie energy - instead of against something with only a "fiat" value and subject to manipulation, cheating and political whim.
Moreover, if the redeemable Units are distributed equally as an "energy dividend" there will be a net transfer from those with above average use of carbon energy to those with below average use of carbon energy. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
Why do we even bother then? In the long run, we're all dead. John Maynard Keynes
So don't start at that end of the donkey.
Why do we even bother then?
I believe in attempting solutions that I think, based on my own experience, have a good chance of working.
Emissions trading is not one of them IMHO, not in a million years.
I lost a good livelihood, and everything I had, on a matter of principle when I blew the whistle on the exact same manipulation that the CFTC have just disciplined Optiver over.
Only now, seven years on, am I being vindicated.
Why did I bother? Because I believed it was the right thing to do...
If you can think of a way to make emissions trading viable, then I will regard you as not just a top rate banker, but a miracle worker. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
