Wednesday, July 25, 2007

Quibbles with Anti's Proposal

Anti-Everything has offered a well thought out proposal to curb carbon emissions. That said I think it is flawed in so far as Anti opts for a cap and trade system over a carbon tax. As I attempted to explain in a previous post not all cap and trade systems are created equal. I am yet to hear a politician advocate a cap and trade system where tradeable permits would be auctioned off. To the extent that cap and trade systems are proposed they tend to allocate permits on the basis of current carbon consumption. This would hardly be an equitable system as you would be existing companies at the expense of potential entrants. I think the biggest problem with a cap and trade is that it will be difficult to actually enforce a hard cap as tradeable permits will likely become the new pork factory. I could easily envision a scenario where congress will constantly create new permits for its pet industries (campaign contributors or constituent firms) and thus dilute the scarcity of permits thereby diminishing the price of tradeable permits. To make a long story short, I don't think an effective Cap and Trade system can survive the political process. It will be yet another area where Congress can claim it is "doing" something about a pressing problem without accomplishing anything.

As to carbon capture and sequestration definitely seems like its worthy of dabbling with. Anti- also suggests (I might be putting words into his mouth so I apologize in advance) mandating hybrid technology or plug-ins. If you implement a carbon tax such a mandate is unnecessary. Consumers would no longer benefit from cheap energy and would prioritize things such as fuel mileage over horsepower and torque.

Plug-ins are more in the long line of technological "silver bullets" that Washington loves but may not accomplish anything. For instance, imagine that every car today was a plug-in, would carbon emissions diminish. The answer is probably no. Tailpipe exhaust would diminish, but there would need to be more coal and gas burnt to actually provide the energy to "plug-in"to.

1 comment:

Anti-Everything said...

Actually in my original post I failed to include a carbon tax (which I think is a great idea) or some kind of a carbon tax/cap and trade hybrid system.

As far as plug-in hybrids go I wouldn't necessarily mandate them, I am simply saying that the technology exists and that Detroit really needs to get on the leading edge of this and not drop the ball like they have on current hybrid models. I would agree that a carbon tax would lead demand towards these types of vehicles so mandating them wouldn’t be necessary.