Discussing Energy Economics on the Internet

Not Easy Being Green

Posted in Emissions Trading,Europe,USA Federal by Cheryl Morgan on the January 19th, 2009

It seems like it is open season on emissions trading schemes at the moment. Over at the Wall Street Journal they are reporting on the hail of fire descending on the U.S. Climate Action Partnership over their blueprint for government action. Meanwhile Sandbag is having at go at the EU’s scheme in the light of the current rapid collapse of carbon prices in that market.

Much of the USCAP criticism appears to be politics as usual. Business interests will carp over anything that costs them money, consumer advocates will rail against anything that puts up prices, and environmentalists will complain that anything that doesn’t hurt businesses and consumers is an outrage. The fact that it is being shot at by all sides suggests that USCAP might actually have hit the middle ground. But that doesn’t mean that their scheme will work.

Europe’s problem is altogether different. Whatever scheme a government comes up with will be unpopular with someone. However, if a carbon trading scheme ends up with a very low price for carbon then it is very clearly not doing its job, no matter how happy some people might be about that. The objective of a carbon trading scheme is to reduce emissions by making them expensive, and if it doesn’t do that then it is pretty much just creating jobs for consultants and IT people.

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