25 Mar 2009

The Government Is Not Going to Drastically Curb Carbon Emissions

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I don’t think the U.S. government is actually going to significantly cut greenhouse gas emissions. Rather, I think it is going to raise trillions of dollars that it then doles back out to industry. So the identities of carbon emitters will certainly shift from the political out groups to the connected people, but I don’t think we will return to the Stone Age. Of course, that’s almost worse than if we really did wreck the economy on the off-chance that it would avert global catastrophe. But nope, instead we will make the economy a lot less efficient, and if James Hansen is right then we will still be screwed.

Here’s Donald Hertzmark in a comment at MasterResource:

With regard to trade agreements and carbon restrictions, we are on thin ice in WTO terms if we slap countervailing duties on countries without carbon restrictions. Just such a tariff was promised by the Secretary of Energy last week, but I suspect it was not thought through, since the primary target would be the country that holds the biggest share of US treasuries, China.

In addition, the initial allocations would hit many industries that are already ailing, including autos. The temptation to tinker with the carbon allocation, perhaps even giving, say, GM, assistance in the purchase of its carbon permits, would likely prove irresistible to and earmark-addicted Congress.

In Europe they solved the allocation problem by handing out excess permits, so that the trades took place with non-existent carbon reduction. That is a neat solution, but it does nothing to change carbon consumption and sooner or later, like any market in non-existent commodities, it crashes, as indeed occurred.

So my challenge to the Obama Administration is: Man up, make your case for a carbon tax and accept the up or down decision.

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