A quick follow-up on the story I wrote yesterday regarding the multi-state agreement California has entered into with four other states to curb carbon emissions via carbon taxes and/or a cap and trade market.
Besides our Governor, the other four states’ governors (AZ, NM, OR, WA) are Democrats.
Two of our neighboring states, poised to welcome businesses that move shop from California and it’s carbon reduction partners (Nevada and Idaho), have Republican governors.
I would love to see headlines demonstrating some intra-party work between our Governor and his fellow Republicans in Nevada and Idaho to either get them to join the carbon club, or strike some sort of deal that will lessen the chance that our businesses move to those states.
May 14th, 2007 at 12:00 am
Senator Tom McClintock on Carbon Cap and Trading:
The problem is this: government is creating an artificial commodity – a pollution license – to be traded among competitors in a market. There are only two ways to create the licenses: either give them to existing companies in proportion to their current output, or have the government auction the credits outright. If you give them to existing companies, you reward dirty producers at the expense of clean ones and erect an insurmountable barrier to entry for new competitors. If government sells the credits at auction, industries that cannot economically reduce their output simply collapse. The impact on the economy is the same as a massive tax increase, and ironically, it produces a perverse incentive for cash-hungry governments to constantly INCREASE pollution limits in order to generate revenues. Cash machines with adjustable knobs are always turned UP, not DOWN.
In either event, billions of dollars are artificially and unproductively shifted either within the economy from losers to winners, or from the private to the public sector. A system of pollution credits might be the least disruptive way to regulate the output of genuinely toxic pollutants, but it will almost certainly run amuck attempting to control ubiquitous carbon dioxide emissions – which is exactly what the California Air Resources Board is preparing to do. According to Weintraub, Linda Adams (who is discussed in last Tuesday’s blog) is vowing to begin an auction under the existing authority of AB 32. And that first step’s a doozey.
May 14th, 2007 at 12:00 am
Senator McClintock is precisely correct, and there is another point to the cap and trade concept oft forgotten by those who push the agenda. See below what I wrote the day I attended the Governor’s Climate Summit:
One of the problems with the cap and trade concept is that it operates under the assumption that companies that are regulated by the cap that do not meet their carbon emission limit are just being obstinate, and they will have to pay for it by purchasing credits or offsets from companies/industries that get onboard and reduce their carbon output. What that mindset fails to recognize is that for some industries to meet the cap, significant investment in clean technology is required. And if those companies have to go out and buy credits and offsets, that’s money they are unable to spend on clean technology. In some cases, the cap and trade market would actually diminish companies’ ability to procure the new technology that would render long term gains, because they are caught in a short term cycle of buying carbon credits that robs them of necessary investment dollars. For those cap advocates who say they want to create “market solutions” to the problem, try this: create tax incentives and contract preferences for businesses that demonstrate reductions in greenhouse gas emissions, and hence, make it a competitive edge to be environmentally responsible. Just as giving rebates to customers who buy energy efficient appliances helped drive the market in that direction, giving “rebates” to companies that choose to reduce their carbon emissions will drive the market where we want it to go.