The Environmental Protection Agency declaration Friday that
greenhouse gases and global warming are a threat requiring action is
the enviro equivalent of the teacher announcing a pop quiz on quadratic
equations. All of us who have just said Eek! when the phrase "cap and
trade" is uttered will have to get serious. The science of global
warming is a romance novel compared to the economic models for reducing
greenhouse emissions–and spending the money made by putting a price on
carbon. It’s a perfect storm of politics and math–as I found out
yesterday.
Congress is already writing cap and trade laws, in
which "credits" allowing polluters to emit X tons of carbon dioxide
will be sold, auctioned or given away. California is doing the same
thing, thanks to a landmark 2006 law ordering curbs on greenhouse
emissions.
How to spend the money from California’s sale or
auction of carbon credits was the topic of a brainstorming session in
Sacramento of economists, regulators, political aides, enviro groups,
one live carbon trader and a couple of consumer advocates. The meeting
was sponsored by Next10,
a California nonprofit that’s hard to describe. Small but smart,
grappling with the state’s financial and entironmental future. It
issues reports that make the big issues graphic and accessible but
don’t dumb down.
The meeting was perfectly organized, highly
diverse, served three good salads for lunch and offered a lot of expert
knowledge in clear language for the less expert. But for all the
brainstorming, it showed how fractious this giant
financial/environmental shift will be. My aim was to keep reminding the
thinkers that real people will suffer unless a lot of the money
gathered by government in a cap and trade system is delivered directly
back to consumers, to offset utility, fuel and vehicle costs, among
other things.
Europe has already been there, and made mistakes
California and the U.S. can avoid. At the demand of industries, it
issued too many carbon credits for free to major polluters. Even before
the recession, trading in the credits was so cheap that Europe wasn’t
hitting its goals for reducing carbon emissions. The worldwide
recession has cut the value of the initial round of credits to near
zero–and the system is set in stone, with no flexibility.
it’s going to affect all of us. If you want to read more, entertainingly presented, here are links to some Fortune magazine pieces that describe what’s already happening in Europe, and how it might translate to the U.S.