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NYT: Cap and Trade is “Politics,” Scheme Creators Say Does Not Apply to CO2!

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posted on May, 16 2009 @ 09:41 PM
The authors of the original studies from which “cap and trade” was derived agree that it will not work for CO2 emissions. Implemented by George H. W. Bush to combat acid rain and sulfur dioxide, cap and trade was originally intended for location-specific and industry-specific effects.

The New York Times, in an in-depth exploration, reveals that application of the cap and trade solution is more a product of politics, and neither science nor economics; reflecting a growing consensus that the carbon-trading schemes cause more harm than good for the environment!

How did cap and trade, hatched as an academic theory in obscure economic journals half a century ago, become the policy of choice in the debate over how to slow the heating of the planet? And how did it come to eclipse the idea of simply slapping a tax on energy consumption that befouls the public square or leaves the nation hostage to foreign oil producers?

The answer is not to be found in the study of economics or environmental science, but in the realm where most policy debates are ultimately settled: politics.

What began as a study of controlling behavior through incentives and market controls evloved into a program targeting the acid rain problem of the 1970s. Developed by a Harvard professor, the carbon-trading scheme was taken up by the 1st Bush administration over the protestations of environmentalists and became a cornerstone of the Clean Air Act of 1990.

Cap and trade evolved from a debate that began in the early 1960s when Ronald H. Coase, of the University of Chicago Law School, wrote an influential paper, "The Problem of Social Cost,” that examined when government should intervene in cases where a private entity causes public harm.

In 1971, W. David Montgomery fleshed out the idea of emissions trading and has spent much of the last three decades trying to figure out how the marketplace can deal with environmental problems that are caused by relatively few actors but have consequences felt globally.

He supported the acid rain trading program, but said it was based on “unique historical and economic circumstances” that did not apply to the much more difficult problem of carbon dioxide emissions.

Mr. Montgomery, now a vice president at Charles River Associates International, a consulting firm, said Mr. Waxman’s proposal would ultimately act like a tax on carbon-producing industries, disguised by a complex cap-and-trade system.

“It is a steel fist of regulation covered by a velvet glove of emission trading,” Mr. Montgomery said. “Why not just impose a carbon tax?”

A more honest approach to reducing GHG emissions is to tax fossil fuel usage; but neither the President nor AGW advocates want to make such straightforward statements, knowing the political firestorm they would create. Instead, they push for hidden taxes that delay implementation of meaningful, more economical solutions.

But despite its success in the relatively contained problem of acid rain in the United States, cap and trade has proved less useful in other environmental problems and has gotten off to a troubled start in Europe.

Even some early devotees of a system of tradable emissions permits believe that it will not work for carbon dioxide, by definition a planetary problem. A straightforward tax on each ton of carbon dioxide emitted by any source, they say, would provide more a more predictable price and a simpler system to police.

“If a philosopher king could design a system, he or should might pick a taxation system,” said Robert Hahn, a White House economist under Mr. Bush who backed the acid rain program but is skeptical that it will work for the much more pervasive problem of carbon dioxide.

Former Vice President Al Gore has (hypocritically) long supported a carbon tax. “Tax what you burn, not what you earn,” he says, as a way of both attacking global warming and remedying some of the inequities in the income tax.

The Obama-era resolution? Use something that can be sold politically, regardless of its feasibility or appropriateness! His sheep will follow, and when they realize they've been taxed anyway, it will be too late. Unfortunatley his plan will divert needed funds for development of alternatives into the pockets of supporters and favored industries.

Not long ago, many of today’s supporters dismissed the idea of tradable emissions permits as an industry-inspired Republican scheme to avoid the real costs of cutting air pollution. The right answer, they said, was strict government regulation, state-of-the-art technology and a federal tax on every ton of harmful emissions.

Cap and trade, by contrast, is almost perfectly designed for the buying and selling of political support through the granting of valuable emissions permits to favor specific industries and even specific Congressional districts. That is precisely what is taking place now in the House Energy and Commerce Committee, which has used such concessions to patch together a Democratic majority to pass a far-reaching bill to regulate carbon emissions through a cap-and-trade plan.

Montgomery, now a researcher with Charles River Associates, International, has clearly pointed out the waste and ineffectiveness of the cap and trade approach to CO2 mitigation:

"Estimating the Costs of Mitigating Greenhouse Gas Emissions"

Montgomery states it could be very expensive to try to meet near-term targets and timetables for emissions reductions, based on analyses of the economic impacts.

He cites alternatives that can achieve the same climate goals at much lower costs, including:
accumulating more scientific information about climate change;
investing in research and development on energy efficient carbon-free energy supply technologies;
avoiding placement of resources into very expensive near-term emission reductions, but instead putting them as a hedge into finding the kind of technologies that will make it possible to reduce emissions much more cheaply in the future;
and planning for only very modest and very low-cost emission reductions in the near term, until these new energy sources become available.

His contention is that such alternatives represent the best direction indicated by the analysis of the economic costs of emission reductions.

Read the full story in the NYT and see for yourself how the CO2 and cap and trade issues are more political than environmental.

Deny ignorance!


posted on May, 16 2009 @ 10:04 PM
This should be required reading for high-school kids; they are the one's who will suffer the burden of this new 'pseudo' tax... and we ALL know who will benefit from that.

These people contrive and scheme so much we've allowed them to make us think THEIR in charge.

Thanks for relaying it.

[edit on 16-5-2009 by Maxmars]

posted on May, 16 2009 @ 11:01 PM
reply to post by Maxmars

Although the Times had published it as a story abour Congress' growing consensus about using cap and trade, the background info was much more interesting.

David Montgomery, the author of the Harvard paper, has superb credentials and has testified about alternatives to CO2 remediation policies. His work has been cited by both sides because of its sound reasoning and reliance on facts rather than political motivation.

All we can do is try to keep the truth in front of peoples' eyes and hope they're more willing to think on their own than be lead by the AGW apostles.

Even tho' Obama and Congress would rather sneak in an invisible tax, even Al Gore has called for outright taxation!



posted on May, 27 2009 @ 12:25 AM
reply to post by Maxmars

Um, you guys are idiots. 1. Montgomery wasn't a professor at Harvard, the cap and trade thing was part of his thesis as a PhD student there. Sloppy reporting. tsk, tsk.

2. The point is that he thinks a cap-and-trade is inferior to a carbon tax, not that it's a "sneak" tax! Almost all economists would rather see a carbon tax over a cap-and-trade system for some technical reasons, this does not make them necessarily opposed to cap-and-trade.

3. Montgomery was the first to write about creating markets for pollution, and so his paper is cited widely for that reason, but a lot of recent developments in economics have come about since then. I don't think this historical looking piece in the NYT should be taken as the final word from economists. Look at what others at RFF are doing now, the field has moved on since, oh the 70s.

[edit on 27-5-2009 by snoutthejoiner]

posted on May, 27 2009 @ 09:19 AM
reply to post by snoutthejoiner

Of course it has moved on; even the UK, EU and Australia recognize that the benefits are not worth the costs when applied to CO2.

Coase and Montgomery agree that it should not be applied to CO2 as well.

The program is apolitical solution, not a scientific one!

All the AGW supporters of cap and trade refuse to acknowledge that the most practical economical (and politically unfavorable) solution is an honest, straightforward to tax.

But then they would have to meet a 'cost/benfits' analysis that ultimately fails (as far as remediation of "global warming" is concerned).

Since they can't support the objective (i.e. "saving the planet") with scientific proof, only 'models', they can't win the political contest, so they disguise the "tax" as casp and trade.

Even now, Congress, the Australian government, the UK and the EU are struggling to coerce competing interests with reduced standards, manipulation of pricing, and lowered CO2 reduction goals to enact an ultimately ineffective measure.

When you have to fiddle with the details to make the "solution" palatable to a majority, it is no longer a solution at all (if it ever was one) and become an end in and of itself.

Welcome to ATS.

(Attacking the messenger and not the message is the ultimate sign of an inability to argue any position, and usually an invalidation of the position.)

Deny ignorance!


posted on May, 27 2009 @ 11:46 AM
reply to post by snoutthejoiner

I'm sure you won't be interested in a lengthy response from an "idiot". So I won't offer one.

I will remain steadfastly committed to my 'idiocy':

This is about creating a revenue model that will allow them to be 'profiteering middlemen' which is standard for their approaches to 'solving' any issues that can be made 'political' by their showmanship.

posted on May, 27 2009 @ 01:05 PM
reply to post by Maxmars

Exactly! While RFF and AERE are studying the economics of proposed CO2 regulation, the science is being hijacked by those with financial interests that stand to gain from the outcome.

The "bottom line" is that the science must come first. Economists can help identify the most effective of the proposed regs/laws compared to their impact on people (developing and industrialized) and the environment.

AGW advocates act as if "the immediate threat of global warming" outwieghs any economic analysis whatsoever.

We're being lied to in advance of being robbed.


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