Thursday, April 26, 2007

Trade-Offs in Allocating Allowances for CO2 Emissions

How inConvenient. From the Congressional Budget Office:

"...Regardless of how the allowances were distributed, most of the cost of meeting a cap on CO2 emissions would be borne by consumers, who would face persistently higher prices for products such as electricity and gasoline. Those price increases would be regressive in that poorer households would bear a larger burden relative to their income than wealthier households would."

"...Besides imposing costs on the economy, a cap-and-trade program would transfer income from some people to others."

"...A cap-and-trade program for CO2 emissions would tend to increase government spending and decrease revenues. Like other consumers, the government would face higher prices for energy and other carbon-intensive goods and services. In addition, by leading to a decline in the production of such goods and services, the cap would cause a decline in the taxes collected on corporate profits."

The CBO is always been worth listening to. This is an eight page Policy Brief. In the words of Instapundit "Read the Whole Thing"