Open Letter warning President Obama about a Global Cap-and-Trade Scheme
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Sam Carana
Feb 3, 2009, 9:50:25 PM2/3/09
to Libertaria
President Obama, please read this!
The energy and environmental policy that you have proposed for the
U.S. is a patchwork of policies, ranging from higher fuel efficiency
standards and subsidies for energy conservation and renewable energy,
to "an economy-wide cap-and-trade program".
The problem is that the cap-and-trade program is not what it claims to
be: it claims that it would reduce greenhouse gas emissions 80% by
2050. However, a cap-and-trade program would not only be ineffective
in reducing greenhouse gases, it would actually be counter-productive
and lead to further pollution and environmental harm. Moreover, a cap-
and-trade program would come at the detriment of other policies, the
very policies that we need to implement, in order to reduce greenhouse
gases.
President Obama, you have an important choice to make in the lead-up
to C4, the Copenhagen Climate Change Conference. Instead of supporting
cap-and-trade, it makes more sense to work towards an agreement for
all countries to commit to each reduce greenhouse gases by a set
percentage per year. Each country can then work out how best to make
their reductions, leaving them a wide range of policy instruments
(such as standards, taxes, fees, subsidies and rebates) to choose
from, each establishing the mix that best facilitates the shifts that
need to take place in their area of the world. While I am convinced
that feebates will work best in many cases, areas should each decide
for themselves what policy instruments they prefer. The main goal now
is to support the commitment that is there around the world to
steadily reduce greenhouse gases, to use this as the basis for a
global agreement and to work out sanctions (such as tariffs) to back
up this commitment.
Yes, we should help developing nations, but we should reconsider how
we want other countries to "develop". We don't want to pay India,
Pakistan and other Asian and African nations to imitate the lifestyle
of "developed" countries, i.e. people traveling by car or plane to
work in polluting industries, to return home to feed on a diet of meat
and ice cream. Current levels of meat production alone add nearly 6.5
billion tons of CO2-equivalent greenhouse gases every year to the
atmosphere, which constitutes some 18% of the worldwide annual
production of 36 billion tons. Environmentally spoken, we need to
ensure that "developing" nations do NOT develop into lookalikes of
what we're now.
A global cap-and-trade scheme would not lead to reductions in
greenhouse gases, instead would be counter-productive and would most
likely make things a lot worse, for many reasons. But first, let's get
one thing straight: a cap-and-trade scheme is NOT a "market" solution.
1. The cap is a regulatory monstrosity requiring extensive
administration and policing, at substantial cost and risk of fraud and
failure. It's a recipe for disputes, even war, about political
decisions to prohibit one what another is allowed to do.
2. A cap-and-trade scheme may claim to give markets clarity by
"putting a price on pollution", but it does not set a price, it only
produces "permits to pollute", while floating the price. That may give
speculators, lawyers and financial advisers opportunities to enrich
themselves, but it doesn't give markets clarity about the cost of
resources. Even in the unlikely case that the whole world would agree
on a global cap-and-trade scheme, it's likely that politicians would
keep changing the price, the number and the conditions of these
permits -- there would be little or no clarity for investors, instead
there are bound to be privileges for some and confusion for others,
which all comes at the expense of giving markets the clarity they ask,
in order to plan and develop the job and investment opportunities in
the clean industries that we all need.
3. Apart from cost clarity, markets need investment confidence.
Markets work better with some idea where best to invest and where to
create job opportunities. Permits-to-pollute effectively constitute a
tax on many products. It's the stick without the carrot -- it only
targets pollution and protects polluters who want to keep polluting.
Markets, by contrast, don't work well in the sole prospect of death
and taxes. Instead, markets prosper in a healthy environment that
promises opportunities for profits, investment and appreciation of
brand name and assets, i.e. the carrot.
4. Markets are not calling for opportunities to trade in permits to
spoil the environment. A small group of people may call for trading in
permits, typically those who would feed on the profits of such trade.
Indeed, those who advocate cap-and-trade most are likely to be the
same lawyers, bureaucrats, speculators and financial advisers that
have brought the world into the worst global crisis since the Great
Depression. These are some of the very people that earlier sought to
gain commission by propagating the myth that it was in the economic
interest of the U.S. to become dependent on oil imports, to keep
sending borrowed money to some of the politically most volatile
regions in the world, while nurturing a perceived need for a U.S.
military presence in those areas. All this has come at a terrible
environmental and financial cost, at the cost of much human misery and
at the expense of many good job and investment opportunities in local
markets for clean and safe ways to produce energy.
5. While a cap-and-trade scheme is silent about what is to happen with
the proceeds of the sale of permits, there should be no surprise as to
what would happen if a cap-and-trade scheme would be imposed globally.
A substantial part of the proceeds will flow from the rich and most
polluting nations to the poorest places in the world, such as India,
Pakistan and other Asian and African nations. A global cap-and-trade
scheme would only allow the rich and polluting countries to keep
polluting, while the people in these poor countries would be inclined
to spend the money on things like polluting cars and eating meat, the
very things that cause the worst pollution. Handing over money to
government bureaucrats in poor countries makes them prone to accept
bribes by industrialists who seek to sell more nuclear and coal-fired
power plants. It's not markets that want this. Nobody benefits from
this. It's a recipe for environmental disaster, corruption, terrorism
and war, all resulting from policies that were ill-conceived and
doomed to fail.
Should I go on describing why a global cap-and-trade scheme wouldn't
work? Let's face it, cap-and-trade is a scheme designed by polluters
to keep polluting - what both people and markets want is the opposite:
Both people and markets want government to stop protecting the
polluters and to instead support the safe and clean solutions that we
all want and need. People want to live in a healthy environment.
Markets want to invest in solutions that combine prosperity with a
healthy environment.
Markets do not want to give "developing" nations the proceeds of such
a cap-and-trade scheme. It isn't that markets are greedy, but the
truth is that a global cap-and-trade scheme would be counter-
productive and only lead to more people driving polluting cars and
eating meat. I suggest that, if we are to impose a form of tax anyway,
then let's simply impose fees on polluting practices, while using the
proceeds where they were raised, in order to create better
alternatives at the very places where such alternatives are needed
most. Insisting that, to be applicable for rebates, alternatives
should be clean and safe, that would genuinely allow market mechanisms
to sort out what works best, while optimizing consumer choice and
opportunities for jobs and for investment. That is what markets want
and how they work best. Such a combination of fees and rebates
(FeeBates) can be self-funding and budget-neutral, thus avoiding
unnecessary bureaucracy and political turmoil. Nonetheless, as I said
earlier, each area should be allowed to decide on their preferred mix
of policies.
In conclusion, we should reject a global cap-and-trade scheme and
instead work on a global commitment to reduce greenhouse gases, which
should be assisted by information on how best to achieve
afforestation, to make and use solar cookers, build pyrolysis ovens
and bury biochar, build solar concentrators and wind turbines, build
desalination plants, use carbon-negative building techniques, etc. All
this can be done with technologies and resources that already are
locally available all around the world. Ensuring that countries have
access to such information will make that they can develop without
being dependent on supervision and imports from other countries. To
help other countries obtain this information is as much in their
interest as in our own interest.
President Obama, I plead to you, don't let polluters misinform you.
Please show the kind of leadership that we all expect from you and
reject a global cap-and-trade scheme -- instead, unite the world into
a commitment to come together annually to set a percentage by which
each country should reduce greenhouse gases.
While the premise to unite the world may sound simple, we are aware
that the challenges will be huge and exhausting. Please keep your
strength in the confidence that the whole world, our children and our
children's children will thank you for this!
Sam Carana
References:
Energy and the Environment
http://www.whitehouse.gov/agenda/energy_and_environment/
UN Climate Change Conference, Copenhagen, Denmark, December 9 - 18,
2009
http://en.cop15.dk/
How Meat Contributes to Global Warming
http://www.sciam.com/article.cfm?id=the-greenhouse-hamburger
The Feebate Network
http://feebate.net
[This article is published under a Creative Commons License]
The energy and environmental policy that you have proposed for the
U.S. is a patchwork of policies, ranging from higher fuel efficiency
standards and subsidies for energy conservation and renewable energy,
to "an economy-wide cap-and-trade program".
The problem is that the cap-and-trade program is not what it claims to
be: it claims that it would reduce greenhouse gas emissions 80% by
2050. However, a cap-and-trade program would not only be ineffective
in reducing greenhouse gases, it would actually be counter-productive
and lead to further pollution and environmental harm. Moreover, a cap-
and-trade program would come at the detriment of other policies, the
very policies that we need to implement, in order to reduce greenhouse
gases.
President Obama, you have an important choice to make in the lead-up
to C4, the Copenhagen Climate Change Conference. Instead of supporting
cap-and-trade, it makes more sense to work towards an agreement for
all countries to commit to each reduce greenhouse gases by a set
percentage per year. Each country can then work out how best to make
their reductions, leaving them a wide range of policy instruments
(such as standards, taxes, fees, subsidies and rebates) to choose
from, each establishing the mix that best facilitates the shifts that
need to take place in their area of the world. While I am convinced
that feebates will work best in many cases, areas should each decide
for themselves what policy instruments they prefer. The main goal now
is to support the commitment that is there around the world to
steadily reduce greenhouse gases, to use this as the basis for a
global agreement and to work out sanctions (such as tariffs) to back
up this commitment.
Yes, we should help developing nations, but we should reconsider how
we want other countries to "develop". We don't want to pay India,
Pakistan and other Asian and African nations to imitate the lifestyle
of "developed" countries, i.e. people traveling by car or plane to
work in polluting industries, to return home to feed on a diet of meat
and ice cream. Current levels of meat production alone add nearly 6.5
billion tons of CO2-equivalent greenhouse gases every year to the
atmosphere, which constitutes some 18% of the worldwide annual
production of 36 billion tons. Environmentally spoken, we need to
ensure that "developing" nations do NOT develop into lookalikes of
what we're now.
A global cap-and-trade scheme would not lead to reductions in
greenhouse gases, instead would be counter-productive and would most
likely make things a lot worse, for many reasons. But first, let's get
one thing straight: a cap-and-trade scheme is NOT a "market" solution.
1. The cap is a regulatory monstrosity requiring extensive
administration and policing, at substantial cost and risk of fraud and
failure. It's a recipe for disputes, even war, about political
decisions to prohibit one what another is allowed to do.
2. A cap-and-trade scheme may claim to give markets clarity by
"putting a price on pollution", but it does not set a price, it only
produces "permits to pollute", while floating the price. That may give
speculators, lawyers and financial advisers opportunities to enrich
themselves, but it doesn't give markets clarity about the cost of
resources. Even in the unlikely case that the whole world would agree
on a global cap-and-trade scheme, it's likely that politicians would
keep changing the price, the number and the conditions of these
permits -- there would be little or no clarity for investors, instead
there are bound to be privileges for some and confusion for others,
which all comes at the expense of giving markets the clarity they ask,
in order to plan and develop the job and investment opportunities in
the clean industries that we all need.
3. Apart from cost clarity, markets need investment confidence.
Markets work better with some idea where best to invest and where to
create job opportunities. Permits-to-pollute effectively constitute a
tax on many products. It's the stick without the carrot -- it only
targets pollution and protects polluters who want to keep polluting.
Markets, by contrast, don't work well in the sole prospect of death
and taxes. Instead, markets prosper in a healthy environment that
promises opportunities for profits, investment and appreciation of
brand name and assets, i.e. the carrot.
4. Markets are not calling for opportunities to trade in permits to
spoil the environment. A small group of people may call for trading in
permits, typically those who would feed on the profits of such trade.
Indeed, those who advocate cap-and-trade most are likely to be the
same lawyers, bureaucrats, speculators and financial advisers that
have brought the world into the worst global crisis since the Great
Depression. These are some of the very people that earlier sought to
gain commission by propagating the myth that it was in the economic
interest of the U.S. to become dependent on oil imports, to keep
sending borrowed money to some of the politically most volatile
regions in the world, while nurturing a perceived need for a U.S.
military presence in those areas. All this has come at a terrible
environmental and financial cost, at the cost of much human misery and
at the expense of many good job and investment opportunities in local
markets for clean and safe ways to produce energy.
5. While a cap-and-trade scheme is silent about what is to happen with
the proceeds of the sale of permits, there should be no surprise as to
what would happen if a cap-and-trade scheme would be imposed globally.
A substantial part of the proceeds will flow from the rich and most
polluting nations to the poorest places in the world, such as India,
Pakistan and other Asian and African nations. A global cap-and-trade
scheme would only allow the rich and polluting countries to keep
polluting, while the people in these poor countries would be inclined
to spend the money on things like polluting cars and eating meat, the
very things that cause the worst pollution. Handing over money to
government bureaucrats in poor countries makes them prone to accept
bribes by industrialists who seek to sell more nuclear and coal-fired
power plants. It's not markets that want this. Nobody benefits from
this. It's a recipe for environmental disaster, corruption, terrorism
and war, all resulting from policies that were ill-conceived and
doomed to fail.
Should I go on describing why a global cap-and-trade scheme wouldn't
work? Let's face it, cap-and-trade is a scheme designed by polluters
to keep polluting - what both people and markets want is the opposite:
Both people and markets want government to stop protecting the
polluters and to instead support the safe and clean solutions that we
all want and need. People want to live in a healthy environment.
Markets want to invest in solutions that combine prosperity with a
healthy environment.
Markets do not want to give "developing" nations the proceeds of such
a cap-and-trade scheme. It isn't that markets are greedy, but the
truth is that a global cap-and-trade scheme would be counter-
productive and only lead to more people driving polluting cars and
eating meat. I suggest that, if we are to impose a form of tax anyway,
then let's simply impose fees on polluting practices, while using the
proceeds where they were raised, in order to create better
alternatives at the very places where such alternatives are needed
most. Insisting that, to be applicable for rebates, alternatives
should be clean and safe, that would genuinely allow market mechanisms
to sort out what works best, while optimizing consumer choice and
opportunities for jobs and for investment. That is what markets want
and how they work best. Such a combination of fees and rebates
(FeeBates) can be self-funding and budget-neutral, thus avoiding
unnecessary bureaucracy and political turmoil. Nonetheless, as I said
earlier, each area should be allowed to decide on their preferred mix
of policies.
In conclusion, we should reject a global cap-and-trade scheme and
instead work on a global commitment to reduce greenhouse gases, which
should be assisted by information on how best to achieve
afforestation, to make and use solar cookers, build pyrolysis ovens
and bury biochar, build solar concentrators and wind turbines, build
desalination plants, use carbon-negative building techniques, etc. All
this can be done with technologies and resources that already are
locally available all around the world. Ensuring that countries have
access to such information will make that they can develop without
being dependent on supervision and imports from other countries. To
help other countries obtain this information is as much in their
interest as in our own interest.
President Obama, I plead to you, don't let polluters misinform you.
Please show the kind of leadership that we all expect from you and
reject a global cap-and-trade scheme -- instead, unite the world into
a commitment to come together annually to set a percentage by which
each country should reduce greenhouse gases.
While the premise to unite the world may sound simple, we are aware
that the challenges will be huge and exhausting. Please keep your
strength in the confidence that the whole world, our children and our
children's children will thank you for this!
Sam Carana
References:
Energy and the Environment
http://www.whitehouse.gov/agenda/energy_and_environment/
UN Climate Change Conference, Copenhagen, Denmark, December 9 - 18,
2009
http://en.cop15.dk/
How Meat Contributes to Global Warming
http://www.sciam.com/article.cfm?id=the-greenhouse-hamburger
The Feebate Network
http://feebate.net
[This article is published under a Creative Commons License]
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