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Robert J. Shapiro
Chairman, U.S. Climate Task Force

Robert J. Shapiro

Robert Shapiro, Under Secretary of Commerce in the Clinton administration, is chairman of the U.S. Climate Task Force and Sonecon, an economic advisory group. ALL POSTS

Lessons from Europe

This is precisely the right question to ask as Congress considers climate legislation, and the answer is straightforward. Much of Europe adopted a cap-and-trade system, the European Trading Scheme (ETS); and at least in its initial rounds, it has utterly failed to reduce greenhouse gas emissions. One reason is the scheme's complexity, which leaves it especially vulnerable to pressures to include countless special exemptions -- Germany overlooks new coal-fired plants, for example -- and exotic offsets from other places. It's also proved to be easy to game, by setting the baseline emissions against which future reductions are counted at a time when emissions were unusually high. That was a main reason why the Kyoto Protocols imposed so little constraint on most countries' emissions.

By contrast, Sweden adopted a carbon-based tax in 1990; and the country's emissions were 8 percent less in 2008 than 18 years earlier, even with an economy 50 percent larger (in real terms). Tax systems can adopt special exemptions or offsets as well; but a tax on carbon is so much easier to understand that instances of special treatment are more obvious. Perhaps most important, the incentives that businesses will need to develop and then adopt more climate-friendly fuels and technologies depend on a known and fairly stable price for carbon. That's something that cap-and-trade can never deliver -- in fact, the price of the permits to emit carbon under Europe's cap-and-trade scheme have moved up or down by an average of 17 percent per-month. But it's the essence of a carbon-based tax.

By Robert J. Shapiro  |  November 11, 2009; 7:30 AM ET Save & Share:  Send E-mail   Facebook   Twitter   Digg   StumbleUpon   Technorati  
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Any article on "Cap and Trade" utterly ignores the premise that a legislative body has the authority-- the "right"- to enforce restrictions on emission: pollution, perhaps, but the activities of people going about their business without injuring anyone nor using force in beyond the scope of the legislature in a civilised society.
The increasingly authoritative attitude of governments is becoming disturbing.. and they do not need a pretext for exerting their wills and whimsy; quite the contrary.

Posted by: irvnx | November 15, 2009 11:07 AM
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