The danger (and cost) of carbon markets

This post at Triple Pundit notes that a study of the largest carbon market, the Kyoto Clean Development Mechanism, finds that most of the carbon offset money is being sent to coal and oil companies and that "much of the market does not reflect actual reductions in emissions."

This is why a world offset market - as opposed to a local offset market - is a really bad idea. And why we shouldn't be giving carbon emissions credits away for free.

Carbon taxes cut out the middleman (and they work)

The most popular proposal for reducing greenhouse gas emissions in the United States is the "cap-and-trade" plan which would set a national limit on emissions and allow companies and individuals to buy additional credits to emit. (I cover some of the drawbacks of this in my look at carbon offsets). However, Europe has tried this scheme and found it fairly ineffective (from the WSJ Energy Roundup):

The Guardian reported last week that Europe’s cap-and-trade system is “manifestly not working as planned.” Today, the Washington Post was somewhat kinder, but still said the system had produced “a bureaucratic morass with a host of unexpected and costly side effects and a much smaller effect on carbon emissions than planned.”

The alternative plan is the carbon tax, a straightforward way to reduce carbon emissions by making them more expensive. CNN Money noted today that Europe's success on fuel efficiency - another issue Americans struggle with - is largely due to high fuel taxes, making consumers choose cars based on gasoline usage. A carbon tax would work in the same fashion, and has been endorsed by a wide range of politicians and economists who generally support so-called Pigovian taxes.

The advantage to a carbon tax is twofold: 1) it cuts out the middleman, because we don't need a trading system (with trading experts, and companies who exist just to trade carbon around) and 2) it raises revenue for a federal government that has a lot on its plate, such as the pending shortfalls in Social Security and Medicare.

Let's get taxing!

Legislation proposes first cap on US carbon emissions

The Energy Blog has the scoop on the first legislation that may institute a carbon emissions cap for the United States. The cap doesn't take effect for several years, nor does it decline particularly quick, but it would be an enormous first step toward combating global warming to even admit we have a problem, which we do in spades...


Details of the bill:

• Would cap carbon emissions in the U.S. at 2004 levels starting in 2012.
  
• The cap would decline slowly to 2/3 of 2004 emissions by 2050.
  

One worry is that the legislation's sponsor, John McCain, said that it "must be bolstered by other assurances that costs will be minimized." This is ridiculous. The United States is responsible for one-quarter of the world's carbon emissions, and therefore at least one-quarter of the surging CO₂ and global average temperature. Scientists have said that emissions need to be reduced by 75-80 percent - immediately - to forestall additional climate change impacts. The irony is that trying to minimize costs of carbon reductions will just mean higher costs in trying manage climate change - such as moving all of Miami to higher ground.

Even more frustrating, the legislation ignores research by the Congressional Budget Office suggesting that a carbon tax would be much more efficient at reducing carbon emissions (not to mention it could provide a substantial sum of money with which to help reduce emissions). But taxes mean paying, something we're not used to doing under this administration.

And yet, for all its flaws, it's better than doing nothing.

Can one state stop global warming?

California might not be solving the problem all by itself, but it's "gambling" (as the NY Times describes it) that by being a leader in improving energy efficiency and reducing greenhouse gases, it will create a following among other American states in the task of fighting global warming. The Times article also discusses the federal lawsuit resulting from the new California law, as the Bush administration argues that regulating carbon dioxide emissions in cars (as the legislation calls for) is equivalent to regulating fuel efficiency, the sole purview of the Federal Government.

It will require some good science to make that case to the court for the Bush Administration - nice to see that they'll use science when it suits them.