Patrick disses carbon trading citing the European trading system. This system has repeatedly collapsed because the emissions have not been set low enough and the property rights in the carbon to be traded have been distributed to the polluters. Is the case against carbon trading as strong if instead the cap was set at the low and declining level agreed by science as necessary to deal with global warming and the property rights were vested in the state (proceeds from auctions go to the state) or distributed equally among individuals (cap and share)?
To answer my own question: Both of my superior options above are quasi-market mechanisms. The problem is the basically neoclassical assumption that changes in the marginal cost of energy will result in marginal adjustments in consumption. To get a sufficient adjustment in consumption the cap and trade plans assume you just need to set a sufficiently high price on carbon. The rub is that drastically reducing carbon emissions cannot be accomplished by adjusting consumption. They can only be achieved by the construction of new infrastructure in energy, transportation, housing and probably agriculture. The construction of basic infrastructure has historically never been left to the market as the up front costs are too high and the benefits not sufficiently excludable. That said, is there possibly still a role for strict capping in setting targets for reduction year on year, and for trading in raising the funds for the massive infrastructural investment which must be made by the state (collectively)? Terry _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
