cap and trade versus a carbon tax

[radon]

Re: cap and trade versus a carbon tax

i think we need to consider stage of development in our analyses. in these matters of governance, income distribution and the determination of what is a luxury, i think china is better compared to the post civil war, 19th century u.s.- i.e. when the u.s. was industrializing. a lot of the environment was trashed in the process. it is a later and wealthier stage of development in which public goods like clean air and water really get valued. why do we think china will care about carbon dioxide when they don't yet care about smog?

I'm not disagreeing with you here. I understand that there are obvious parallels with the American robber barons. My point is only that poverty doesn't cause pollution anymore than rotting meat creates flies. The same cultural lack of empathy that leads to one also creates the other. There seems to be a callous disregard to human suffering in china and pollution is only one of the evils that it causes.

[santafe2]

Re: cap and trade versus a carbon tax

why do we think china will care about carbon dioxide when they don't yet care about smog?

jk, The answer is of course they don't care and they don't have to care unless we begin, (as apparently we are now), to make suggestions that clean air will be part of our business relationship. China is free to tell us to take a hike and produce goods that their citizens and other countries want to consume.

I find it interesting that our cap and trade legislation will become a defacto carbon tax when we begin to externalize the costs. That is, there will be a carbon cap in the US but a carbon tax at the border.

c1ue had made a comment that we'd be better served to repatriate this carbon tax to China, maybe by funding less polluting facilities. It's a good idea. It meets our policy goals, everybody saves face and politicians can cut ribbons at new, cleaner burning power plants. And the citizens of China get the bonus of cleaner air.

[we_are_toast]

Re: cap and trade versus a carbon tax

jk, The answer is of course they don't care and they don't have to care unless we begin, (as apparently we are now), to make suggestions that clean air will be part of our business relationship. China is free to tell us to take a hike and produce goods that their citizens and other countries want to consume.

I find it interesting that our cap and trade legislation will become a defacto carbon tax when we begin to externalize the costs. That is, there will be a carbon cap in the US but a carbon tax at the border.

c1ue had made a comment that we'd be better served to repatriate this carbon tax to China, maybe by funding less polluting facilities. It's a good idea. It meets our policy goals, everybody saves face and politicians can cut ribbons at new, cleaner burning power plants. And the citizens of China get the bonus of cleaner air.

China WILL care. They will care because of the carbon tax on their exports, and they will care because they realize their wide ranging geography is extremely susceptible to the most negative effects of global warming. There's a pretty fair chance that the water shortages in Beijing could get so severe that a large part of the city may have to be abandoned. The continuing loss of permafrost in the Tibetan plateau is already severely effecting planned development projects. Shifts in weather patterns will force large migrations of the population which will lead to destabilization.

The government knows these problems are only going to get worse if they try to duplicate the mistakes the U.S. made in the robber baron era of the late 1800's. They will play hard ball to get the technology to reduce carbon emissions, at a reduced cost, but the U.S. and Europe will be more than happy to make sure they get it.

It's a race against the clock, and the clock is winning.

[c1ue]

Re: cap and trade versus a carbon tax

China will care when their GDP achieves 2nd world status and has the luxury to do so.

As JK noted, this time around things are better than the 1st industrial revolution in the US and UK: child labor is relatively better, health is relatively better, etc etc. Some of this is knowledge, some of this is technology, and some of this is getting to build the capital equipment base without actually having to build it.

As for the carbon tax making China care - fortunately the US has given China exactly the weapon it needs to fight back: US dollars. Or more specifically China's ongoing purchases of US dollars despite the obvious devaluation coming down the pipe.

China is the only nation still even attempting to maintain American debt dependence.

Threatening China with a carbon tax is exactly like a junkie telling his dealer to sell him only crack in sterile containers.

[Starving Steve]

Re: cap and trade versus a carbon tax

China WILL care. They will care because of the carbon tax on their exports, and they will care because they realize their wide ranging geography is extremely susceptible to the most negative effects of global warming. There's a pretty fair chance that the water shortages in Beijing could get so severe that a large part of the city may have to be abandoned. The continuing loss of permafrost in the Tibetan plateau is already severely effecting planned development projects. Shifts in weather patterns will force large migrations of the population which will lead to destabilization.

The government knows these problems are only going to get worse if they try to duplicate the mistakes the U.S. made in the robber baron era of the late 1800's. They will play hard ball to get the technology to reduce carbon emissions, at a reduced cost, but the U.S. and Europe will be more than happy to make sure they get it.

It's a race against the clock, and the clock is winning.

With the rather wise current leadership in China, I think China will be one of the last places on Earth to suffer a water shortage.

China is building massive hydro-electric dams, so water is going to be dammed and available. Also China is building numerous atomic power plants, so cheap electric power is going to be available to filter sea water and pump it up to the elevation of its cities.

Saudi-Arabia is now pumping sea water and filtering that sea water. And if Saudi-Arabia has plenty of water, don't expect China to run short of water for very long.

No, the countries to expect a water crisis in the years ahead are those countries like America and Canada where radical environmentalists like Dr. David Chow now help set energy policy. So-called green energy solutions are not going to solve any future water shortage.

[btattoo]

Re: cap and trade versus a carbon tax

Fire never dies. I'm going to guess I've never written Fire before. It is like a beast. I'm also afraid it is the only way.

Anyone read Taibbi's latest in Rolling Stone about Goldman (in the July 9-23 issue)? About the carbon "market": "The feature of this plan that has special appeal to speculators is that the "cap" on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. Which means that this is a brand-new commodities market where the main commodity to be traded is guaranteed to rise in price over time." i.e. - this is not a market, it is another FIRE scam.

[ThePythonicCow]

Re: cap and trade versus a carbon tax

Anyone read Taibbi's latest in Rolling Stone about Goldman (in the July 9-23 issue)?

Yes. See the thread GS, Not U.S., Behind Bubble Economy.

[don]

Re: cap and trade versus a carbon tax

As the most ambitious energy and climate-change legislation ever introduced in Congress made its way to a floor vote last Friday, it grew fat with compromises, carve-outs, concessions and out-and-out gifts intended to win the votes of wavering lawmakers and the support of powerful industries.

The deal making continued right up until the final minutes, with the bill’s co-author Representative Henry A. Waxman, Democrat of California, doling out billions of dollars in promises on the House floor to secure the final votes needed for passage.

The bill was freighted with hundreds of pages of special-interest favors, even as environmentalists lamented that its greenhouse-gas reduction targets had been whittled down.

Some of the prizes were relatively small, like the $50 million hurricane research center for a freshman lawmaker from Florida.

Others were huge and threatened to undermine the environmental goals of the bill, like a series of compromises reached with rural and farm-state members that would funnel billions of dollars in payments to agriculture and forestry interests.

Automakers, steel companies, natural gas drillers, refiners, universities and real estate agents all got in on the fast-moving action.

The biggest concessions went to utilities, which wanted assurances that they could continue to operate and build coal-burning power plants without shouldering new costs. The utilities received not only tens of billions of dollars worth of free pollution permits, but also billions for work on technology to capture carbon-dioxide emissions from coal combustion to help meet future pollution targets.

That deal, negotiated by Representative Rick Boucher, a conservative Democrat from Virginia’s coal country, won the support of the Edison Electric Institute, the utility industry lobby, and lawmakers from regions dependent on coal for electricity.

Representative Joe Barton, a Texas Republican staunchly opposed to the bill, marveled at the deal-cutting on Friday.

“It is unprecedented,” Mr. Barton said.

http://www.nytimes.com/2009/07/01/us...ef=todayspaper

[ThePythonicCow]

Re: cap and trade versus a carbon tax

Representative Joe Barton, a Texas Republican staunchly opposed to the bill, marveled at the deal-cutting on Friday.

“It is unprecedented,” Mr. Barton said.

Unprecedented deal-cutting on Capitol Hill. That is a truly awesome claim.

[santafe2]

Re: cap and trade versus a carbon tax

Unprecedented deal-cutting on Capitol Hill. That is a truly awesome claim.

So much so that it may weaken current state based climate legislation. The Senate bill should be a real peach. What we'll get out of the cap and trade bill is a structure with little substance. I sound like I'm complaining but I'll take it as a starting point.

[ThePythonicCow]

Re: cap and trade versus a carbon tax

So much so that it may weaken current state based climate legislation.

The essential element will remain. Goldman Sachs will have the basis for a vast market in carbon credits. The (regulatory captured) government makes the rules and enforces the need for these "credits." Goldman Sachs makes the market for them and gets rich (well, even richer.) Americas producers and consumers will have to pay Goldman Sachs increasingly higher prices to stay in business and keep the Fed carbon emmissions police off their back.

It's a work of (evil) genius. That some political hacks get some pork and increased regulatory power is just a side "benefit."

[santafe2]

Re: cap and trade versus a carbon tax

The essential element will remain. Goldman Sachs will have the basis for a vast market in carbon credits.

I've heard this several times. Can someone walk me through this idea? A-to-B-to-C? I've been reading through the cap and trade bill and I don't see how this will ever work like the massive credit/mortgage derivatives. How do the carbon credits move from the utilities to GS or some other entity?

[ThePythonicCow]

Re: cap and trade versus a carbon tax

I've heard this several times. Can someone walk me through this idea? A-to-B-to-C? I've been reading through the cap and trade bill and I don't see how this will ever work like the massive credit/mortgage derivatives. How do the carbon credits move from the utilities to GS or some other entity?

Well, I haven't read any part of the cap and trade bill -- my hat's off to you (or my condolences to you, as you prefer.)

My shoot from the hip understanding is as follows. I realize I probably am not really answering your question.

The government gives or sells carbon credits to various energy consumers (carbon polluters), and then legally requires these polluters to own carbon credits in proportion to the amount of their carbon pollution.

Carbon credits can be bought and sold, by law. Those with more credits than they need can make money by selling them to those who need them more.

Goldman Sachs wil be a market maker in these credits. So if you have extra credits, you don't have to find someone else willing to purchase them and sell directly. Rather you can sell to Goldman.

Present and recent Goldman executives were instrumental in writing and pushing this scheme. So you can wager that they arranged affairs so that there will be a good profit for them as a market maker in carbon credits.

Goldman has regulatory capture of the relevant government agencies and if any further changes in the law are needed, in the relevant politicians.

There is no way Goldman doesn't make serious money on this.

[Aerius]

Re: cap and trade versus a carbon tax

For argument's sake, cap and trade is better because:
1) Doesn't have the word "tax" in it so 90% of the population will not be against it
2) Can be used as an excuse for protectionism (a rate can be set because a credit is worth $x compared to a % which is more difficult to use)
3) Lets the market set the price instead of the government

On the third point, there is a middle man in both systems: crony bankers vs inefficient bureaucrats. I personally think that the markets are better are redistributing resources (we do believe in capitalism, yes?), but whether the benefits outweigh the costs is another matter.

[Fiat Currency]

Re: cap and trade versus a carbon tax

There is no way Goldman doesn't make serious money on this.

This seems to agree with several of your comments ...

http://www.globalresearch.ca/index.p...t=va&aid=14209