Not the Way to Go
President Obama, Governor Bill Richardson, and many state and federal government leaders seem to think that there is a solution to climate change called “cap-and-trade” – and that this plan will help increase investments in renewable technology companies.
This is not just a theoretical issue because top leaders in the U.S. House are busily trying to figure out how to enact a “cap-and-trade” plan--even bypassing one of their normal subcommittees if necessary.
Cap-and-trade is called that because it would put a “cap” on carbon emissions and then set up a system for trading carbon emissions “credits.”
However, in view of the program’s complexity and its potential for “gaming the system,” as well as downright corruption, the unintended consequences could well be economic damage at a time when the economy cannot sustain the burden.
Consider this excerpt from a recent article in the Houston Chronicle:
“(A market estimated to be valued at $3 trillion by 2020) could take on the same characteristics as the mortgage derivatives market if investors are allowed to securitize emissions credits without strong regulatory oversight and enforcement, said Michelle Chan, a senior policy analyst with the group Friends of the Earth and the author of the report. ‘If we aren’t careful, we could end up creating a massive, poorly regulated derivatives market that not only poses risks to the broader financial markets, but also undermines efforts to save the climate,’ Chan said.”
Indeed, cap-and-trade is similarly complex as the “derivatives” market that helped lead to a global economic meltdown, nor would it meet the desired quality of being “transparent.”
Given the fact that China is the largest emitter of CO2 in the world, and that many other nations such as India, Brazil, Indonesia and Russia use high-emission technologies, even if the U.S. were to adopt cap-and-trade so as to reduce our own emissions (doubtful given the European experience), any real solution has to be global--not just an ill-thought-out “feel-good” plan adopted by America.
There are more effective solutions than a go-it-alone cap-and-trade plan in this country.
California Senator Barbara Boxer, chair of the Senate Environment and Public Works Committee, was chided by The Washington Post recently for saying, " ‘We're willing to look at everything . . . .’ But she ended that declaration with ‘. . . but we believe cap-and-trade is the way to go.’” It behooves our own members of congress to not just take for granted that cap-and-trade is “the way to go.”
Bill McDonald, of Las Cruces, is a Ph.D. geophysicist whose experience includes managing a major National Science Foundation program on world ocean dynamics for the Scripps Oceanographic Institute.