... Action on climate, if it happens, will take the form of "cap and trade": businesses won't be told what to produce or how, but they will have to buy permits to cover their emissions of carbon dioxide and other greenhouse gases. So they'll be able to increase their profits if they can burn less carbon -- and there's every reason to believe that they'll be clever and creative about finding ways to do just that. <...> The acid rain controversy of the 1980s was in many respects a dress rehearsal for today's fight over climate change. Then as now, right-wing ideologues denied the science. Then as now, industry groups claimed that any attempt to limit emissions would inflict grievous economic harm.But in 1990 the United States went ahead anyway with a cap-and-trade system for sulfur dioxide. And guess what. It worked, delivering a sharp reduction in pollution at lower-than-predicted cost. Curbing greenhouse gases will be a much bigger and more complex task -- but we're likely to be surprised at how easy it is once we get started. ...
... Action on climate, if it happens, will take the form of "cap and trade": businesses won't be told what to produce or how, but they will have to buy permits to cover their emissions of carbon dioxide and other greenhouse gases. So they'll be able to increase their profits if they can burn less carbon -- and there's every reason to believe that they'll be clever and creative about finding ways to do just that.
<...>
The acid rain controversy of the 1980s was in many respects a dress rehearsal for today's fight over climate change. Then as now, right-wing ideologues denied the science. Then as now, industry groups claimed that any attempt to limit emissions would inflict grievous economic harm.
But in 1990 the United States went ahead anyway with a cap-and-trade system for sulfur dioxide. And guess what. It worked, delivering a sharp reduction in pollution at lower-than-predicted cost.
Curbing greenhouse gases will be a much bigger and more complex task -- but we're likely to be surprised at how easy it is once we get started. ...
I know there are skeptics/critics of cap & trade here, and I was wondering what you think of Krugman's faith in the cap & trade approach to reducing carbon emissions based on its success with acid rain in the U.S. in the 1990's? La Chine dorme. Laisse la dormir. Quand la Chine s'éveillera, le monde tremblera.
I should have read this first:
James Hansen - Cap and Fade - NYTimes.com
... Because cap and trade is enforced through the selling and trading of permits, it actually perpetuates the pollution it is supposed to eliminate. If every polluter's emissions fell below the incrementally lowered cap, then the price of pollution credits would collapse and the economic rationale to keep reducing pollution would disappear.
Yes, but what is the likelihood that emissions will fall more quickly than the incrementally lowered cap? Did that happen with acid rain?
Worse yet, polluters' lobbyists ensured that the clean air amendments allowed existing power plants to be "grandfathered," avoiding many pollution regulations. These old plants would soon be retired anyway, the utilities claimed. That's hardly been the case: Two-thirds of today's coal-fired power plants were constructed before 1975. Cap and trade also did little to improve public health. Coal emissions are still significant contributing factors in four of the five leading causes of mortality in the United States -- and mercury, arsenic and various coal pollutants also cause birth defects, asthma and other ailments. <...> To compound matters, the Congressional carbon cap would also encourage "offsets" -- alternatives to emission reductions, like planting trees on degraded land or avoiding deforestation in Brazil. Caps would be raised by the offset amount, even if such offsets are imaginary or unverifiable. Stopping deforestation in one area does not reduce demand for lumber or food-growing land, so deforestation simply moves elsewhere. ...
Cap and trade also did little to improve public health. Coal emissions are still significant contributing factors in four of the five leading causes of mortality in the United States -- and mercury, arsenic and various coal pollutants also cause birth defects, asthma and other ailments.
To compound matters, the Congressional carbon cap would also encourage "offsets" -- alternatives to emission reductions, like planting trees on degraded land or avoiding deforestation in Brazil. Caps would be raised by the offset amount, even if such offsets are imaginary or unverifiable. Stopping deforestation in one area does not reduce demand for lumber or food-growing land, so deforestation simply moves elsewhere. ...
... There is a better alternative, one that would be more efficient and less costly than cap and trade: "fee and dividend." Under this approach, a gradually rising carbon fee would be collected at the mine or port of entry for each fossil fuel (coal, oil and gas). The fee would be uniform, a certain number of dollars per ton of carbon dioxide in the fuel. The public would not directly pay any fee, but the price of goods would rise in proportion to how much carbon-emitting fuel is used in their production. All of the collected fees would then be distributed to the public. Prudent people would use their dividend wisely, adjusting their lifestyle, choice of vehicle and so on. Those who do better than average in choosing less-polluting goods would receive more in the dividend than they pay in added costs.For example, when the fee reached $115 per ton of carbon dioxide it would add $1 per gallon to the price of gasoline and 5 to 6 cents per kilowatt-hour to the price of electricity. Given the amount of oil, gas and coal used in the United States in 2007, that carbon fee would yield about $600 billion per year. The resulting dividend for each adult American would be as much as $3,000 per year. As the fee rose, tipping points would be reached at which various carbon-free energies and carbon-saving technologies would become cheaper than fossil fuels plus their fees. As time goes on, fossil fuel use would collapse. ...
... There is a better alternative, one that would be more efficient and less costly than cap and trade: "fee and dividend." Under this approach, a gradually rising carbon fee would be collected at the mine or port of entry for each fossil fuel (coal, oil and gas). The fee would be uniform, a certain number of dollars per ton of carbon dioxide in the fuel. The public would not directly pay any fee, but the price of goods would rise in proportion to how much carbon-emitting fuel is used in their production.
All of the collected fees would then be distributed to the public. Prudent people would use their dividend wisely, adjusting their lifestyle, choice of vehicle and so on. Those who do better than average in choosing less-polluting goods would receive more in the dividend than they pay in added costs.
For example, when the fee reached $115 per ton of carbon dioxide it would add $1 per gallon to the price of gasoline and 5 to 6 cents per kilowatt-hour to the price of electricity. Given the amount of oil, gas and coal used in the United States in 2007, that carbon fee would yield about $600 billion per year. The resulting dividend for each adult American would be as much as $3,000 per year. As the fee rose, tipping points would be reached at which various carbon-free energies and carbon-saving technologies would become cheaper than fossil fuels plus their fees. As time goes on, fossil fuel use would collapse. ...
