I was reading Paul Krugman's column the other day and was dismayed by his argument. According to the Nobel Prize-winning economist and New York Times columnist, a half-ass, half-hearted measure on curbing carbon emissions is better than doing nothing, but I'm unconvinced. As written in The Washington Post:
On paper, the Waxman-Markey bill puts a cost on carbon dioxide by imposing a ceiling, or cap, on greenhouse gas emissions and then setting up a market for regulated industries -- such as the electric power sector -- to buy and sell allowances to pollute under that cap. As the cap is reduced each year, market participants will exchange allowances in a complex auction market.
If you liked what credit default swaps did to our economy, you're going to love cap-and-trade. Just read Title VIII of the bill, which lets investment banks, hedge funds and other speculators participate in the cap-and-trade market. They don't have emissions to cut; they have commissions to make.
The real hidden catch of the cap-and-trade system, though, is that it will require consumers to pay twice: first for emission allowances and then for the construction of new low- and zero-carbon power plants.
That doesn't sound very good, and the bad news gets progressively worse.
Contrary to assurances from the bill's sponsors that utility customers wouldn't have to pay these costs for the first decade, some coal-dependent utilities would be forced to purchase more than half of their allowances when the program is scheduled to begin in 2012. Would these allowances reduce our greenhouse gas emissions? No; that would come when consumers footed a second bill - for the cost of their utilities either to retrofit coal and gas plants to capture carbon - something that cannot be done today on a commercial scale - or to shut them down and build non-carbon-producing nuclear plants and wind farms instead.
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