The Story of Cap and Trade- An Overview

Our Climate Intern Jason Chen wrote an overview of Annie Leonard’s new video, “The Story of Cap and Trade”. As reminder the blog posting are not meant to reflect the positions of Carrots and Sticks, rather they provide a forum to discuss the issues. -Chris

The Story of Stuff Project recently came out with another video, this time about the cap and trade system. Annie Leonard presents a strong case against what she considers to be a pseudo-solution.

Three main criticisms are presented in the video.

The first “devil in the details” as she calls it, are the free permits that would be given away to industrial polluters. Under the proposed system, industrial polluters will get the majority of these permits for free. “The more they pollute, the more they get.” They tried this “cap and giveaway” system in Europe and it didn’t work, but what did happen was that “polluters made billions of dollars in extra profits.” According to Annie Leonard, these permits should be sold and the profit should be invested in a clean energy economy and/or given to the citizenry to help pay for increase energy prices.

Another point that is brought up in the video is paying back our ecological debt. I think this is a critical aspect of solving the problem of climate change because it’s not only about survival, it’s about responsibility. We in the industrial nations have lived a comfortable life and in doing so, have released most of the CO2. As a result, people who live in developing countries are suffering from our actions. Any reasonable person can recognize this as being unjust. Therefore, I agree with Annie Leonard that any real solution should also help the people who are suffering the most from climate change.

Devil number two is offsetting. Offset permits are created when a company reduces carbon. They, in turn, can sell this offset permit to another company who wants to buy it. In theory, one activity offsets the other, but it’s not as simple as it sounds. For example, it’s very difficult to prove that real carbon emissions are being reduced. Companies that want offset permits can just claim that they cut down on future expansion plans.

Devil number three is distraction. Annie Leonard believes that there are real solutions out there, but are not focused on because we’re distracted by the whole cap and trade system. The Clean Air Act recognizes carbon as a pollutant and therefore can be capped by the EPA, but the cap and trade law proposed in 2009 “guts the Clean Air Act, leaving it to the market to fix the problem.” Thus, if a cap and trade system makes it more difficult for the government to make strong laws, then it is a distraction.

In conclusion, Annie Leonard believes that solid caps, strong laws, citizen action and carbon fees are what is needed to solve the problem. -Jason


1 comment so far

  1. Christopher on

    To my way of thinking the main problem with the video is conflating “cap and trade” with the particulars of the Cap and Trade deal embodied by the House ACES bill and the Senate CEJAPA.

    Things like rewarding bad behavior with giveaways, not using revenue to address damage done to the developing world, and having an bad offset program are related to particulars of the current Cap and Trade. A bill could have a cap, a trade mechanism, no offsets, money to redress harm to the developing world, and no rewarding of bad behavior.

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