Is it a great concept to harness the power of the markets to drive and finance the development and implementation of clean and renewable energy sources/systems or just the latest Ponzi scheme by the ruling elite of the new world order? I've heard many people that include personal friends of all political stripes give a variety of opinions and I've been surprised many times by them. I even have a friend who's a left leaning libertarian who thinks it's all a massive scam that people like Bush, Clinton and Gore are colluding on behind closed doors.

It's a politically acceptable way for the rich to buy their way out of problems.

The capacity of the atmosphere to absorb CO2 is a valuable but limited resource, and markets are the most efficient way to allocate resources. Trading carbon credits insures that carbon is emitted only by the sources that are the most valuable: all the other sources are priced out of the market. Cap and trade programs worked for SO2 emissions in the electric industry, and they can work for carbon emissions as well.
Consider the alternatives. One approach would be for the government to set a limit on the total carbon from all sources, but how would that be enforced? Would there be a quota for each industry? Or for each person? Would the electric company be force to stop generating once it exceeded its limit? Would I be prevented from driving more miles after I used my quota? Would I be required to buy a smaller car to limit my emissions? Do you really want that much government interference in the economy, or in your life?
Another approach is to add a carbon tax to encourage conservation. That’s better than quotas, but how would you determine the amount of the tax? A cap and trade program, presuming that the total allowable carbon emissions are set at the correct level, automatically finds the right price to generate the optimum amount of conservation and/or investment in alternatives.
The most important limitation of those two approaches (aside from the intrinsic authoritarianism and inefficiency of government interference in markets) is that they can only work within the borders of a single country. There is no way for the US, or even an alliance of US, Japan and EU nations, to force China or India to tax or set limits on their energy use, but the Kyoto Protocols have already set up a cap and trade system the pays Chinese sources to reduce emissions. China has lots of coal use, and only rudimentary emission controls. It’s relatively inexpensive for Chinese sources to be upgraded for reduced emissions if all kinds, especially when compared to upgrading the heavily controlled sources in the US and Europe. That’s one reason why carbon emission certificates, which were once trading for ~$40/ton, are around $1/ton now. That’s good news, because it means that the Kyoto goals can be met with little economic disruption. It also means that it is feasible to require further reductions in carbon emissions.

em

It's a politically acceptable way for the rich to buy their way out of problems.
"The rich" is just another way of saying "the people who get the best of everything." That has always been politically acceptable in the US. If that bothers you, you might be happier in Tibet or Cuba or somewhere.

em

I've noticed how the positions that many people hold on this issue are twisted out of alingment with their usual positions on property, wealth, class and the markets. I find this to be extremely interesting.

"The rich" is just another way of saying "the people who get the best of everything." That has always been politically acceptable in the US. If that bothers you, you might be happier in Tibet or Cuba or somewhere.

emI'm sure that both Cuba and Tibet have rich people. A better solution would be for you to make me rich, then I could afford to buy some carbon credits and declare myself to be carbon neutral.

It's not good news. The cheaper they are, the more they will be abused. Additionally, what do you think the countries that are selling their 'carbon credits' (as if they're a real thing) will do with the money they get by selling them? Gee, might they industrialize more? Hmmm? This is just another tax in the waiting and a ploy by the rich to say 'see I'm doing my share so my excess usage shouldn't be scrutinized'. I would also like to know how this is all monitored. Talk about global economy. I guess we're heading toward a global government too. None of you will have to move out of this fine place. We'll all be the same.

I'm sure that both Cuba and Tibet have rich people. A better solution would be for you to make me rich, then I could afford to buy some carbon credits and declare myself to be carbon neutral.
I don't know about Tibet, but I'm pretty sure every rich Cuban in the world lives in Miami.
But why do you think I should make you rich? I'm having a hard enough time making myself rich.
Cap and trade programs don't depend on people voluntarily buying the credits to be carbon neutral. No one buys SO2 credits voluntarily, and that program is working fine.
The program is to require fuel users to buy them to cover all the carbon that is emitted. If a large number are purchased voluntarily, the price is bid up and fewer credits are available for industrial use. In effect, those individuals are deciding on their own that carbon emissions must be reduced below what the program requires. If the program allowed the optimum amount of carbon missions, voluntary purchase would only serve to reduce emissions below the optimum level. If that happens, the simple solution is just to increase the total number of credits.
If course, the devil is in the details, and the whole program depends upon strong enforcement and proper measurement. The measurement problem is not trivial. Nevertheless, most people are happy with the way that the SO2 cap and trade program worked (and still works), and that's why it's the model for carbon reduction.

em

It's not good news. The cheaper they are, the more they will be abused. Additionally, what do you think the countries that are selling their 'carbon credits' (as if they're a real thing) will do with the money they get by selling them? Gee, might they industrialize more? Hmmm? This is just another tax in the waiting and a ploy by the rich to say 'see I'm doing my share so my excess usage shouldn't be scrutinized'. I would also like to know how this is all monitored. Talk about global economy. I guess we're heading toward a global government too. None of you will have to move out of this fine place. We'll all be the same.
Kyoto credits are a real thing, but how do you abuse them? i'd really like to know, because maybe I could make some money at it.
You're right that monitoring is a big issue, but that is true regardless of how you try to dreduce emissions, but you're off base on everything else.
What is excess use? In a cap and trade system, I use what I need and pay the cost. There is no excess use. It's market based and no one has a right to question my decisions. That's way better than the government assigning a limit on what I can consume. The whole cap and trade system can work at the wholesale level, so individuals never need get involved, except as price changes affect their purchasing decisions.
It's also way less of a "world government" solution than fixed limits on emissions. You really would need a world government to enforce limits on other countries, but a cap and trade system only needs auditors to verify that those who sell credits created by reducing emissions are actually following the rules, regardless of where they are.
And what's wrong with economic development, as long as you manage the environmental effects? At least some of the money generated bby credits might go into carbon capture technology, or renewable energy.

em

If course, the devil is in the details, and the whole program depends upon strong enforcement and proper measurement.

That is the heart of the issue. For a "cap and trade" system to work, you need a hard, and I do mean hard, cap. Without it, the program is worthless. That's why Gore's "purchasing" of "credits" is such horse sh!t, and a voluntary system will never work.

At the end of the day all this blither blathering about carbon credits is busy talk to avoid the need for a vigorous carbon tax. That is how you change behaviour!

In a cap and trade system, I use what I need and pay the cost. There is no excess use. It's market based and no one has a right to question my decisions.

There is only no excess use if there is a hard cap that is enforceable and auditable, otherwise it's BS.

There is only no excess use if there is a hard cap that is enforceable and auditable, otherwise it's BS.
That was a major issue in the Northeast Regional Greenhouse Gas Initiative, which will establish a cap and trade system for 7 Northeast states.

em

That is the heart of the issue. For a "cap and trade" system to work, you need a hard, and I do mean hard, cap. Without it, the program is worthless. That's why Gore's "purchasing" of "credits" is such horse sh!t, and a voluntary system will never work.

At the end of the day all this blither blathering about carbon credits is busy talk to avoid the need for a vigorous carbon tax. That is how you change behaviour!
I agree with all that. To the consumer, cap and trade will look a lot like a tax, but we can never require foreign governments to impose taxes. A cap and trade program can pay for the behavior you want, even in countries that don't officially participate. Cap and trade is also much more likely to be acceptable to industry, because (depending on the details of the program) they can make money on the price increase related to the credits. That's why GE and PSEG (among others) support cap and trade.
But why is Gore the target of such disdain? He's one leader who has brought the issue to tha table. Is he worse than Dick "conservation is not a policy" Cheney, who got his energy policy from a secret meeting with Ken Lay (and probably a bunch of Saudis as well), or W, the Worst President in History? The only time a rational energy policy designed to address Islamic extemism and environmental issues ever had a chance in the US was the day after 9/11, and W told us to go shopping instead.

em

Why do you think Repubs had a problem with Kyoto to begin with? So 'auditors' would be honest about their findings? You do know that we can't even monitor other nations nuclear proliferation programs, don't you? Not even theOil for Food program. What makes you believe that this would be an honest system? Also, who sets the limits and how is it administered? It's a pie in the sky idea.

Why do you think Repubs had a problem with Kyoto to begin with? So 'auditors' would be honest about their findings? You do know that we can't even monitor other nations nuclear proliferation programs, don't you? Not even theOil for Food program. What makes you believe that this would be an honest system? Also, who sets the limits and how is it administered? It's a pie in the sky idea.
And yet the SO2 trading program works fine. What makes it an honest system is that we can withold the cash, or disallow unverifiable credits. In any event, any carbon control rule requires verification. Cap and trade is probably the easiest to verify, at least for those who are selling reductions, because they need to prove their reductions to get the payment.

em

Kyoto credits are a real thing, but how do you abuse them? i'd really like to know, because maybe I could make some money at it.
You're right that monitoring is a big issue, but that is true regardless of how you try to dreduce emissions, but you're off base on everything else.
What is excess use? In a cap and trade system, I use what I need and pay the cost. There is no excess use. It's market based and no one has a right to question my decisions. That's way better than the government assigning a limit on what I can consume. The whole cap and trade system can work at the wholesale level, so individuals never need get involved, except as price changes affect their purchasing decisions.
It's also way less of a "world government" solution than fixed limits on emissions. You really would need a world government to enforce limits on other countries, but a cap and trade system only needs auditors to verify that those who sell credits created by reducing emissions are actually following the rules, regardless of where they are.
And what's wrong with economic development, as long as you manage the environmental effects? At least some of the money generated bby credits might go into carbon capture technology, or renewable energy.

em
If there is a limited carrying capacity of the atmosphere to absorb greenhouse gases, and the real solution to global warming is an overall reduction of greenhouse gases, how does this cap and trade system reduce anything? It seems that since its all voluntary, all that has to happen is for a utility company, for example, decide that it is far more profitable to not engage in this apparent shell game than to either sell the credits and limit their ability to generate power, or purchase credits and have it negatively affect earnings, which in turn drives down share prices? I don't see how this does anything but make for a feel-good press release.

If there is a limited carrying capacity of the atmosphere to absorb greenhouse gases, and the real solution to global warming is an overall reduction of greenhouse gases, how does this cap and trade system reduce anything? It seems that since its all voluntary, all that has to happen is for a utility company, for example, decide that it is far more profitable to not engage in this apparent shell game than to either sell the credits and limit their ability to generate power, or purchase credits and have it negatively affect earnings, which in turn drives down share prices? I don't see how this does anything but make for a feel-good press release.
Kyoto is not voluntary for the participating countries, and neither is the California or Northeast cap and trade programs. A utility can't just decide not to participate. The price of credits is determined by supply and demand. The supply should be limited to something that reflects the optimum amount of greenhouse gas emissions. If the price of credits is low (as Kyoto credits seem to be), you can reduce the total cap to further reduce emissons, if people think that is necessary.
Voluntary credits will never solve the problem, but they are not entirely a shell game either. If the credits are based on real reductions by existing sources, or go to finance renewable energy, there is a real reduction on greenhouse gases. The problem with a voluntary program is that only a few firms participate. Intrawest, Aspen Skiing Company and Walmart all buy lots of green power, but only because they want to be seen as leaders for their own business purposes. That additional money really goes for things that improve the environment, but the majority of companies or individuals don't need to be recogized as leaders in that way.

em

Is it a great concept to harness the power of the markets to drive and finance the development and implementation of clean and renewable energy sources/systems or just the latest Ponzi scheme by the ruling elite of the new world order? I've heard many people that include personal friends of all political stripes give a variety of opinions and I've been surprised many times by them. I even have a friend who's a left leaning libertarian who thinks it's all a massive scam that people like Bush, Clinton and Gore are colluding on behind closed doors.

For a pollution credit system to work, an accurate, short term measurement of total current emissions is needed, both globally and at each point source. This is virtually impossible for net global CO2 emissions, especially if things like planting trees is considered a credit. Because there is no rigor in the CO2 emission measurements, all of the emission trading is completely bogus.

The cap and trade works well with SOx in the US because there is accurate measurement of SOx at all major point sources within the U.S.

Cap and trade does not work for things like mercury emissions because it is a local problem. Reducing mercury emissions at a source 500 miles away doesn't help the kid growing up next to a point source.

Kyoto is not voluntary for the participating countries, ...
em

What an odd phrase. A country has to voluntarily choose to sign into Kyoto.

For a pollution credit system to work, an accurate, short term measurement of total current emissions is needed, both globally and at each point source. This is virtually impossible for net global CO2 emissions, especially if things like planting trees is considered a credit. Because there is no rigor in the CO2 emission measurements, all of the emission trading is completely bogus.

The cap and trade works well with SOx in the US because there is accurate measurement of SOx at all major point sources within the U.S.

Cap and trade does not work for things like mercury emissions because it is a local problem. Reducing mercury emissions at a source 500 miles away doesn't help the kid growing up next to a point source.


I agree with you on the problems with trying to monitor CO2 emissions. The monitoring done in the developed countries, especially the U.S. is the exception, not the rule.

But, mercury has more than one form, and isn't always local.

http://pubs.acs.org/subscribe/journals/esthag-w/2006/may/science/nl_mercury.html

The mercury belched out of coal-burning power plants seems to change as it travels downwind, according to new research published today on ES&T’s Research ASAP website (DOI: 10.1021/es051556v), but just how that happens remains unclear. If verified, the research confounds the current understanding of what happens to mercury carried in the atmosphere—and suggests that new regulations on power plants’ mercury emissions may not have the desired impact.

Coal-burning power plants disperse mercury in far-traveling plumes, but new research suggests that the toxic metal may be undergoing some unknown transformation as it moves through the atmosphere.

Last year, the Bush Administration finalized the Clean Air Mercury Rule, the first regulation in the world to address mercury emissions. It imposes cutbacks on mercury emissions from coal-fired power plants, capping total U.S. output to 15 tons by 2018.

The effectiveness of the rule depends on the form of mercury emitted from power plants. Elemental mercury (Hg0) can linger in the atmosphere for months to years, traveling across the planet. Reactive gaseous mercury (RGM; Hg2+), on the other hand, is water-soluble and washes out of the air within days, close to its source. As a result, controlling Hg0 will probably require international efforts, but countries can target RGM.

What an odd phrase. A country has to voluntarily choose to sign into Kyoto.
Once a country is into Kyoto, it is not voluntary for the companies operating in that country. The UK electric industry cannot simply decide not to buy carbon certificates. They wouldn't if they could. They made a lot of money on them.

em

Oh no... I almost agree with Steam on this-- but for different reasons. Kyoto was based on 90s emissions levels, and China and India are already on a completely different scale--- all while much of the western world has actually lowered real emissions. While I understand the principle behind trying to promote wealthier nations to create less emissions, the fact that they can buy credits from other nations circumvents the entire point of this exercise. It is a joke.

For a pollution credit system to work, an accurate, short term measurement of total current emissions is needed, both globally and at each point source. This is virtually impossible for net global CO2 emissions, especially if things like planting trees is considered a credit. Because there is no rigor in the CO2 emission measurements, all of the emission trading is completely bogus.

The cap and trade works well with SOx in the US because there is accurate measurement of SOx at all major point sources within the U.S.

Cap and trade does not work for things like mercury emissions because it is a local problem. Reducing mercury emissions at a source 500 miles away doesn't help the kid growing up next to a point source.
The vast majority of carbon allowances in the Northeast rule (RGGI) are simply created by the participating states. The number of allowances created every year determines how much carbon can be emmitted. For the system to work, all you really need to monitor is fuel use. It's really no different than SO2 trading, except that it allows for a limited number of credits created by reductions in emissions from sources not covered by the rule ("offsets" ). Carbon emissons are simply a function of fuel use, and they are easier to estimate than SO2 emissions, which are a function of both the amount of fuel use, the burn temperatures and control technology.
Offsets are difficult to measure, but they are limited, and anyone who wants to claim them needs to submit to auditing. If they don't comply, you just don't issue the offset certificate. Verification is not a trivial problem, but it does have the advantage of getting some reponse form sources that are not otherwise subject to the rule. What other system does that? If you think the response is not adequate, you just stop paying for it.
I don't know about mercury. I've never heard of a cap and trade program for that, probably for the reasons you cited.

em

Oh no... I almost agree with Steam on this-- but for different reasons. Kyoto was based on 90s emissions levels, and China and India are already on a completely different scale--- all while much of the western world has actually lowered real emissions. While I understand the principle behind trying to promote wealthier nations to create less emissions, the fact that they can buy credits from other nations circumvents the entire point of this exercise. It is a joke.
The fact that they can buy credits from other nations is the only hope of limiting total emissions. Without that, there is no way to force China and India to comply. What limits the effectiveness of Kyoto is that the allowable limits are too high to stabilize the atmosphere. the signatory nations are afraid to reduce carbon emissions enough to do that.
If the recent reduction in the price of Kyoto credits becomes permanent, it's possible that the signatories could reduce the total allowable emission to something less than what it is now. That would drive the price of credits back up, but it would improve the effectiveness of the whole program.
You can object all you want, but what other type of program allows the market do decide which fuel use is most importand, and brings non participants into the program?
I don't believe the West has lowered emissions. The US certainly hasn't. It's really only a function of fuel use. We'r using more oil (bad), more coal (really bad)
more natural gas (not so bad) and less nuclear.
em

The vast majority of carbon allowances in the Northeast rule (RGGI) are simply created by the participating states. The number of allowances created every year determines how much carbon can be emmitted. For the system to work, all you really need to monitor is fuel use. It's really no different than SO2 trading, except that it allows for a limited number of credits created by reductions in emissions from sources not covered by the rule ("offsets" ). Carbon emissons are simply a function of fuel use, and they are easier to estimate than SO2 emissions, which are a function of both the amount of fuel use, the burn temperatures and control technology.
Offsets are difficult to measure, but they are limited, and anyone who wants to claim them needs to submit to auditing. If they don't comply, you just don't issue the offset certificate. Verification is not a trivial problem, but it does have the advantage of getting some reponse form sources that are not otherwise subject to the rule. What other system does that? If you think the response is not adequate, you just stop paying for it.
I don't know about mercury. I've never heard of a cap and trade program for that, probably for the reasons you cited.

em

As you acknowldegem the devil is in the details. If CO2 emissions were a problem confined to the Northeast States and if alll of the capping and trading was within that region, then offsets could be rigorous. However, the problem is global, the offsets are international, global verification is currently impossible, and it's easy to generate credits for things that would have happened anyway, or for things that were projected to happen but didn't. So, I still think that carbon credits are completely bogus and if implemented will be rife with abuse. I'd never trust that a carbon credti certificate reflected any real reductin in CO2 emissions.

As you acknowldegem the devil is in the details. If CO2 emissions were a problem confined to the Northeast States and if alll of the capping and trading was within that region, then offsets could be rigorous. However, the problem is global, the offsets are international, global verification is currently impossible, and it's easy to generate credits for things that would have happened anyway, or for things that were projected to happen but didn't. So, I still think that carbon credits are completely bogus and if implemented will be rife with abuse. I'd never trust that a carbon credti certificate reflected any real reductin in CO2 emissions.
The RGGI rule allows only limited offsets, and only if the priceof credits exceeds certain threshold values. Offsets are not the main point of the program. The total amount of carbon emissions, which is an amount negotiated among the participating states (in RGGI) or nations (in Kyoto), create the vast majority of emission credits. In RGGI, offsets are a way of expanding the the total pool of credits to prevent the price of credits from getting so high that it disrupts the economies of the region. In Kyoto, it has the same effect but it also has the effect of drawing non-paticipating countries into it, which is no small thing. Everyone is aware of the problems of abuse and of free riders ("things that would have happened anyway"). Just becauase those problems can't be completely eliminated, that doesn't mean that the whole program is "completely bogus," especially when, as in RGGI, offsets are such a small part of it.
I advised my clients to oppose RGGI because I believed that a regional program would create a competitive disadvantage for the region, and become an example to build opposition to any action on carbon. I think I misjudged how much public support there is for action on global warming. I now think that the idea is spreading, even to the Red states, and that the Federal government will adopt a rule and/or reopen Kyoto to allow US participation. the fact that there are local and regional programs appearing without leadership from Washington is part of the reason for that.

em

If there is a limited carrying capacity of the atmosphere to absorb greenhouse gases, and the real solution to global warming is an overall reduction of greenhouse gases, how does this cap and trade system reduce anything? It seems that since its all voluntary, all that has to happen is for a utility company, for example, decide that it is far more profitable to not engage in this apparent shell game than to either sell the credits and limit their ability to generate power, or purchase credits and have it negatively affect earnings, which in turn drives down share prices? I don't see how this does anything but make for a feel-good press release.

The absolute nonsense that is the Kyoto treaty and the notion of Carbon Credits and trading is nothing more than a massive wealth transfer from the nations of the industrialized west to the "lesser developed" nations, of which China, India and Russia are listed.

The sad fact is that people have bought into this nonsense and actaully believe that sending billions of taxpayer dollars to China and Russia that they will use to build arms or coal powered power plants is a good thing.

The notion is a sham, and typically people have grabbed onto it.