Tuesday, January 15, 2008

Carbon Trading's Effect on Temperature

I know this article is referring to carbon offsets.

But the underlying premise is also true for the trade component of cap-and-trade schemes.

It is the cap that does the work. Trading is simply a wealth distribution mechanism. If the goal is to raise the price of carbon high enough to change behavior, an auction accomplishes the purpose of discovering the clearing price with much less slippage (bid/ask spreads; commissions; fees; bribes etc.).

A per-capita rebate to the consumer would mitigate the regressive impacts of rising carbon prices. Free allocation of carbon allowances is pure-and simple rent-seeking. In this case the seekers don't even own the rental property.

In my hometown that's called fraud.

From Celsias:

There are often reports in the media exposing a particular scandalous aspect of a certain offset project, such as a lack of community consultation, or the fact that the project was going to happen anyway without the money from the offsets company and what was being sold was ‘hot air’. There are a number of contradictions and inconsistencies that are fundamental to all offset projects.

1) No one can quantify how much of a ‘climate benefit’ a project generates. Dan Welch, who conducted a comparative study of offset providers for the Ethical Consumer magazine, summarized this problem when he described offsets as “an imaginary commodity created by deducting what you hope happens from what you guess would have happened.” There is so much speculation in trying to calculate what might have happened if you hadn’t contributed a certain amount of money to a certain project. In practice, this makes it impossible to establish a meaningful degree of equivalence between the ‘climate benefit’ that is being sold and the carbon emissions that are supposed to be being ‘offset’....

From: Celsias