Reply To: Cap and Trade

[Rezwan]

OK, I read the Freeman Dyson article. http://www.nybooks.com/articles/21494

I was told, above, “Cap-and-Trade had the very worst consequences, except for Gore’s recommendations.” But Kyoto, which uses cap and trade, is actually neutral or beneficial, according to Dyson. It’s close to their optimal – global carbon tax. A plus one, vs. plus 3 for their optimal.

Perhaps Stern (which is terrible, but better than Gore) uses cap and trade with a vengeance and that’s why the above quote about “cap and trade” being the worst? But there must be other factors involved, however that make a difference in the -15 vs. +1 scores for two systems which incorporate cap and trade.

Here’s the quote from Dyson article:

Here are the net values of the various policies as calculated by the DICE model. The values are calculated as differences from the business-as-usual model, without any emission controls. A plus value means that the policy is better than business-as-usual, with the reduction of damage due to climate change exceeding the cost of controls. A minus value means that the policy is worse than business-as-usual, with costs exceeding the reduction of damage. The unit of value is $1 trillion, and the values are specified to the nearest trillion.

The net value of the optimal program, a global carbon tax increasing gradually with time, is plus three—that is, a benefit of some $3 trillion.

The Kyoto Protocol has a value of plus one with US participation, zero without US participation.

The “Stern” policy has a value of minus fifteen,

the “Gore” policy minus twenty-one, and

“low-cost backstop” plus seventeen.

Which brings me back to not throwing the baby out with the bathwater. Cap and trade – I need more info. It’s theoretically a market based solution to environmental problems, which seems worth looking into. Although “religiosity” seems to be clouding an investigation into it, both pro and con.