THE DEBATE OF OUR TIME: TAX OR TRADE

This page also offers some terrific graphic presentations, like Paying To Pollute, a video explaining carbon cap-and-trade.

Carbon tax or carbon market? The jury is out; Momentum is now in favor of trading, but some think its too messy
May 3, 2007 (Reuters via MSNBC)

WHO
The European Union and US decision makers presently deciding how best to combat climate change.

WHAT
The article discusses the two primary incentive schemes proposed to reverse what Amory Lovins calls “Global Weirding,” a CO2 emissions trading scheme, called cap-and-trade, and a CO2 emissions taxing regime.

WHEN
Now mandatory in Kyoto Protocol countries, especially in Europe, and voluntary elsewhere, there is a growing sense that some kind of emissions control is soon coming to the US.

WHERE
Say it again: Now mandatory in Kyoto Protocol countries, especially in Europe, and voluntary elsewhere, there is a growing sense that some kind of emissions control is soon coming to the US.

WHY
- Because there is always opposition to new taxes for any purpose, cap-and-trade (promising to put the free market to work) is an appealing idea for the control of emissions. But the $30 billion EU market has not been unequivocally successful. The price of emissions has been undependable. The market can be “worked” in a way that renders undue profits to big utilities and fails to control emissions.
- Cap-and-trade limits total emissions. The tax puts a price on emitting.
UN veterans cap-and-trade as doable, not perfect.
- Economists like Nobel-winner Joseph Stiglitz see problems in the need for the enormous volume of permits a big nation like the US would need.

QUOTES
- “Maybe the best thing about a carbon market is that it is not a tax.”
- Dennis Anderson, professor of energy and environmental studies, Imperial College, London: "My guess is the carbon market will be pretty volatile and economists will be sighing in a few years and saying 'I wish we'd gone for a carbon tax'…I think in a few years we'll revisit a tax."
- U.N. climate chief Yvo de Boer: "The carbon market has the potential to green the world's economic growth…"
- Stiglitz: "[A large volume of permits] would involve hundreds of billions (of U.S. dollars) of transfers, the distributive consequences are huge…The very reason that I argue for a carbon tax is it's very difficult to decide on the allocation of emissions rights. There's no principle that anybody has put forward that's agreeable."