Cap-and-trade is so hot right now.

Friday, June 5, 2009
Let me get this strait…

We cap carbon emissions as a desirable level. Then we issue tradable pollution permits. How this is done is an important step which I can address in a footnote but I’m going to move on.

The tradable permits have a price. That price determines whether it is going to be worthwhile to stop polluting or reduce emissions. If it costs less to buy a permit than reduce my emissions (technology, lost revenue), I’m buying that permit! If it costs more to buy a permit than user cleaner technology, then I’m going to clean up my plant or reduce output to control my emissions.

All this settles out to a sexy little efficient scenario where all the people who can easily reduce emissions will do so and those who can’t won’t do it. The costs of reducing emissions will the lowest it can be and the annual carbon emissions level will be set at…whatever… [edit: whatever congress/EPA feels like it should be set at]

So everybody’s good right?

Wrong. Everybody feels good. We are cutting emissions! Sure we are-in some places. In other places plants are just buying the permits so they can drive on. They pass the expense on to their customers and the bills go up in neighborhoods where the plant can’t cost-effectively lower the pollution output.

Meanwhile, while everybody has got their fuzzies from carbon control legislature, a constant flow of carbon-dioxide is going into the air albeit measured and “capped.” Perhaps it is assumed that every year we get a new atmosphere with a baseline amount of carbon-dioxide, and we can add to it a certain amount each year and then switch it out for a new one next year.

This is the Keeling Curve. It measures carbon-dioxide content of the atmosphere at Mauna Loa, HI in parts per million.

Notice something? That’s right, it goes up. More and more carbon-dioxide is put into the atmosphere every year. If you believe in the greenhouse affect and the theory of global climate change, this is a bad thing.

Okay, straw man effectively knocked out. Let me make a real argument. What if I told you the carbon-dioxide was necessary for plant life on Earth. It’s literally plant food. Plants do not exist without carbon-dioxide in the atmosphere. Well heck, put more of the stuff in the atmosphere. All that will happen is more plants will grow or they will grow bigger of faster.

Okay. Fine.

This is the Keeling Curve. Notice something? That’s right, it goes up. Which means more carbon-dioxide is going into the atmosphere. Some is getting taken out, but there is still a net increase in the amount of carbon-dioxide going up there. Carbon is going up at the rate of a smoke stack but is getting sucked back out at the pace of leaf growth. I’ve watched leaves grow. It takes a long time. Please don’t be so amused by the “cap” that you forget to ask where what’s left over is going to go.

We can argue that the biosphere will catch up...leaf growth is still growth, right? Finding the balance is the key. When we can emit as much carbon as will grow in foliage each year, there should be a balance, right? Right?

Well. What does your equilibrium state look like? (I prefer not to use loaded language, so I’ll go ahead and use images) The point is there has to be an eventual end-state to all of this extra plant food.

Something ought to be done that doesn’t just result in a steady flow of carbon each year to add to the world’s problems. The answer is reaching a carbon output level that is EXACTLY parallel to the natural amount of carbon that is naturally released into the atmosphere. That is to say: rotting detritus and chemical exchange on the surface of water. This means a switch to ZERO emission energy generation like wind and solar energy. If I must go on, I’ll do it in another segment.

For now, suffice it to say that I’m not really cap-and-trade kind of guy. Nice thought, but long-run ineffective.

I still owe you that footnote. Here goes. The question is whether the government issues permits free or auctions. I’m not going to triple-check my info for a foot-note but it looks like recent cap-and-trade legislation is talking about a mix of free permits and auctioned permits. 15% will be auctioned if memory serves.

If the government issues permits free, then NOBODY cuts emissions. They’ve got permits now for whatever they pollute. In addition to this, now they’ve got something to sell-for FREE. Environmental groups will probably be the only market for these permits which can be sold when better technology comes about to clean up pollution (which it should and will-it always does). The price will be low if not zero for these permits when they are sold.

Now auctioning off the permits actually has the desired affect of accomplishing exactly what I’ve described above. It actually does cause incentive to change technologies or find another way to lower emissions, because you’ve got to PAY to pollute. I think I also made it clear why that’s a lame idea.

Anyway, perhaps they’re thinking of a smooth middle ground. Meet up half way. Because as anyone who has passed third grade math will tell you, 15% is totally a good half-way point.

Anyhow, toodles. Sorry so long.



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