Tuesday, July 14, 2009

A Welcome Breath Of Carbon-Neutral Air

That said, there are legitimate concerns with respect to cap-and-trade policies in an energy policy, centered mostly around how easy it is to game the system to benefit large polluters, as well as a moral objection to the introduction of free market solutions to essentially a social problem. Rather than seek a reduction in carbon emissions, cap-and-trade effectively shifts the burden, spreading it around.
To a degree, this is true, but it's also true that there is a heavy financial incentive on the part of those who have credits to trade not to pollute more (they have less income), and as time goes on, the price of credits will index up, thus negating the pollution incentive for the purchasers of credits.
It's a gradual withdrawal of carbon from the pollution cycle, and therefore manageable.
Palin raises a ridiculous point, particularly in light of what other criticisms of cap-and-trade amount to.
She claims:

American prosperity has always been driven by the steady supply of abundant, affordable energy. Particularly in Alaska, we understand the inherent link between energy and prosperity, energy and opportunity, and energy and security. Consequently, many of us in this huge, energy-rich state recognize that the president's cap-and-trade energy tax would adversely affect every aspect of the U.S. economy.

There is no denying that as the world becomes more industrialized, we need to reform our energy policy and become less dependent on foreign energy sources. But the answer doesn't lie in making energy scarcer and more expensive! Those who understand the issue know we can meet our energy needs and environmental challenges without destroying America's economy.

Cap-and-trade does not limit energy production in the sense that it sets a ceiling on it. If some company decides that it needs more energy, and it is willing to make the rather punitive payment to use it, then it is free to do so. Cap-and-trade is not a quota system with finite limits.
Indeed, if anything, these voluntary measures will help extend America's own fossil fuel supplies as companies recognize there is profit in protecting the environment.
And profit creates jobs. And jobs create an economy.
Now, you don't have to take my word for it. Here's Conor Clarke, subbing in for Andrew Sullivan:

Cap and trade creates revenue, which can be used to mitigate the costs for consumers. When the Congressional Budget Office did it's analysis of the distribution of the costs and benefits of the House's cap and trade bill, it found that the poorest quintile would actually benefit.

Cap-and-trade attempts to quantify the social costs of business decisions. If I litter, I create a job for a sanitation worker, which means a wage must be paid. In addition, I help feed a vermin population, which means a health official must be hired.
American society has always been predicated on the quantifiable. It's the Flatlanders' best method of proving their superiority. I can compare my wallet to yours, and if mine has more, I'm a better person.
Which might be true, but probably is not. As Warren Buffett so often points out, nobody gets anywhere in this world without the support of the people and society around him or her. Those who can shunt aside as much of the costs of success as possible to hidden and unmeasurable resources make pure profit.
Which is why it's important to account for these as closely as possible. Level the playing field, and open the books.
Who knows? Maybe it will even turn Alaska into a powerhouse state!