Heritage Reminds Us that Cap and Trade is Not Halting Emissions in Europe
This article from December 2007 says:
…the world has already witnessed many unpleasant surprises with Europe’s ongoing efforts to impose a cap and trade program under the Kyoto Protocol, the international climate treaty to reduce greenhouse gas emissions.
In fact, European efforts have racked up significant costs while failing to reduce emissions. Nearly every European country participating has higher emissions today than when the treaty was first signed in 1997. Further, despite ongoing criticism of the United States from Kyoto parties for failing to ratify the treaty, emissions in many of these nations are actually rising faster than in the United States.
What is Cap and Trade
I’ve heard rumors that cap and trade will ultimately affect individuals, but so far US legislation being considered directly affects energy companies. Various estimates exist as to how much cap and trade laws will affect each family. We’ve already had one round of cap and trade, and apparently it wasn’t as expensive as people thought it would be. Here’s an explanation of Cap and Trade from the Center for American Progress:
Each large-scale emitter, or company, will have a limit on the amount of greenhouse gas that it can emit. The firm must have an “emissions permit” for every ton of carbon dioxide it releases into the atmosphere. These permits set an enforceable limit, or cap, on the amount of greenhouse gas pollution that the company is allowed to emit. Over time, the limits become stricter, allowing less and less pollution, until the ultimate reduction goal is met. This is similar to the cap and trade program enacted by the Clean Air Act of 1990, which reduced the sulfur emissions that cause acid rain, and it met the goals at a much lower cost than industry or government predicted.
It will be relatively cheaper or easier for some companies to reduce their emissions below their required limit than others. These more efficient companies, who emit less than their allowance, can sell their extra permits to companies that are not able to make reductions as easily. This creates a system that guarantees a set level of overall reductions, while rewarding the most efficient companies and ensuring that the cap can be met at the lowest possible cost to the economy.
Heritage lists the following negative effects of cap and trade schemes:
- A regressive tax, which has a greater negative affect on the poor who are least likely to be able to afford energy cost increases.
- Net job losses. Some jobs will be gone for good. Others will be lost to lower cost workers in foreign countries (unless these countries adopt similar laws).
- Little environmental benefit to show. Even if all signatory nations achieve their Kyoto promises, and if the US signed on to Kyoto in a similar fashion, only a .07 degree Celsius improvement would occur.