Cap & Trade

Author: Ted Starr

Cap & Trade is a system which has been proffered by the Progressives and Environmentalists as a solution to the growing output of carbon during the energy generation process. In a Cap & Trade system, there is an exchange of carbon "credits" wherein a carbon-producer, such as a coal-fired power plant, would be deemed (by the government,) to be producing too much carbon and would need to either reduce their carbon output (thus reducing their revenues) or to purchase carbon credits from organizations (selected by the government,) that are providing services which supposedly improve the ratio of carbon in the atmosphere, such as planting trees.

The Cap & Trade ideology rests on several faulty assumptions. First, that it is bad to produce energy in any fashion other than what passes as "green" technology. Second, that you can mitigate a "government identified" bad behavior through purchasing credits from someone else who has a "government identified" good behavior. A third false assumption is that you can measure the true environmental impact of energy output by measuring the output itself, such as measuring smokestack emissions. Policy built on false assumptions leads to bad, and sometimes ridiculous, results.

Take the first assumption - "green" technology is good, old-school technology like Coal is bad. The use of coal, oil, natural gas, and nuclear energy are all considered "bad" under a cap & trade regime. The first 3 have higher emissions at the generation site, but relatively simple extraction of the raw materials. Nuclear is very clean, but has long term storage issues. A Cap & Trade advocate who was being intellectually honest would have a coal producer be able to buy carbon credits from a nuclear plant. This would encourage the building of nuclear plants to reduce carbon emissions. That will not happen. What is going to happen is, the carbon credits will come from politically connected companies who specialize in planting trees, organic gardening, and other government approved green technologies such as wind generators. We will, at some point, have to fall back on our tried and true technologies because we will not be able to generate enough power to sustain our standard of living.

Possibly the most laughable of the assumptions is being able to purchase the ability to perform "government identified bad activities" through credits. In this cap & trade universe, one could imagine a criminal being able to buy credits to allow them to, say, defraud investors as long as they donate enough money to the church. Or, to kill a certain number of people as long as they donate to adoption agencies. It sounds absurd, but this is the basic intellectual underpinning of cap & trade. It sounds ridiculous when applied to everyday activities, so why wouldn't one think it ridiculous when applied to energy generation?

Finally, the assumption that the only important measure is output of carbon at the generation site is also faulty logic. Under a cap & trade regime, gasoline will be taxed (or gas companies can purchase tax credits) to support green technologies such as electric cars and hybrids. However, hybrids like the Prius and similar offerings use very large batteries, which are toxic, and these batteries need to be replaced at regular intervals. I mention this to point out the fact that that the energy used to manufacture these hybrid cars takes up a great deal of energy and produces environmentally suspect outputs, but since they are not what is measured for cap & trade, they don't enter into this equation. I drive a 23 year old car, which I have maintained myself. This car is more environmentally friendly, cradle to grave, than hybrids which get replaced every few years, along with the batteries they use. Cap & Trade would levy a carbon tax on my vehicle and not the hybrid. I find this logic absurd.

The bottom line is that the purpose of Cap & Trade is not to reduce carbon footprints or provide any sort of environmentally-positive outcome. The purpose is to have government determine winners and losers, and to direct private companies in how they produce products and interact with their market. This never ends well. Cap & Trade should be blocked during this Congress, and future Congresses should put a stake in its heart and end the discussion of anything remotely like this. It is a bureaucratic solution to a non-problem.