Is Cap and Trade B.S.?


I just watched The Story of Cap & Trade by Annie Leonard (who also was behind The Story of Stuff) and I must say I was pleasantly surprised.  I thought I was just going to watch another explanation of what Cap and Trade is, but instead I got to see Annie criticize the leading "solution" that the world leaders point towards to help solve CO2 emissions: Cap and Trade.

And I loved every minute of it.

So why should you care?  Like it or not, as a citizen of Planet Earth you owe it to yourself and those around you to at least have a passing knowledge of one of the biggest environmental issues of your "oxygen-breathing" years: Climate Change and its proposed solution, Cap & Trade.  If you've been paying any attention to the Climate Change debate or the bills going through Congress and the Senate than you have no doubt heard about Cap and Trade.   Those on the far right claim it's going to raise your energy bills by thousands of dollars.  Those on the far left claim it is the panacea to carbon emissions.

And then there are people who really think about the issue for themselves (like Annie Leonard) and notice things don't really add up. To be completely honest with you... I'm one of those people too.

The biggest criticism expressed in the video is that Cap & Trade will turn our Greenhouse Gas reduction plans over to bankers and bureaucrats (i.e. the same type of people responsible for the sub-prime mortgage meltdown).  Annie expresses three main criticisms:

  • Cap and Giveaway - this is in reference to the pollution credits that polluting industries will get
  • Offsetting - referring to the practice of one group reducing their carbon output, then selling that reduction as an "offset"
  • Distraction - Cap & Trade distracts us from real solutions

To give you an idea of why I agree with Annie that Cap & Trade could turn out to be a logistical nightmare and a Climate Change red herring, let me just talk about the second of these criticisms, Offsetting, and my experience with someone who sells Carbon Offsets.

So this guy is telling me all about Carbon Offsets and why they are so great.  Basically it goes like this:

  1. Company A reduces (notice italics) energy usage
  2. Company A figures out how much CO2 was saved from their reduced energy usage (i.e. how much CO2 was prevented from entering atmosphere)
  3. Company A sells the "saved" CO2 (pieces of paper that say X amount of CO2 was prevented from entering the atmosphere) to Company B who needs to show some governing body that they are reducing their CO2 emissions.  So Company B is "offsetting" its pollution with the energy saved from Company A.

Sounds great huh?  But here's where it gets interesting.

As someone who cares about energy monitoring I asked the Carbon Offset salesman how Company A really proves they saved energy.  His answer: "All they have to do is compare energy bills from year 1 to year 2 and note a reduction".  To which I said :

"But what if Company A's energy bills are reduced because in year 1 their business was booming so they used a lot of energy to make a lot of widgets, but then in year 2 their business fell off so they didnt produce as many widgets and didnt use as much energy?  It would look as if they reduced their energy consumption because their energy bills were lower - because they didnt make as many widgets - but in reality they may not have gotten any more efficient as a company.  In fact, they could have gotten less efficient and used more energy per widget produced, but since their sales were off as a company their energy bills may be lower due to poor widget sales."

And his answer was: "It doesnt matter as long as the energy bills are lower in year 2."  And that was the point at which I decided I didnt like Carbon Offsets.

You see, if we give the power to reduce greenhouse gas emissions to bankers, bureaucrats, politicians, and business people just trying to meet a number and make a buck, then nothing meaningful will ever get done.  The system will be gamed, favors will be doled out to get votes, and honest increases in efficiency will be foregone in mounds of paperwork and bad intentions.  The Story of Cap and Trade video mentions some solutions, but you'll have to watch it to see if you agree with them.  I'm not here to provide solutions.  I'm here to say that before we can honestly talk about solutions we all have to make sure we understand the problem.

Before we hail Cap & Trade as the only viable solution, we need to honestly ask ourselves if it is the right solution.   If it's not? At best it's a distraction.  At worst, it's a disaster.

Put aside 9 minutes of your day to watch the video.  I dont think you will regret it.

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Cap and Trade is something that may seem like a good idea but it is meaningless unless you get EVERY country to participate. Case in point, A company is looking to make a new plant here in the good ol USA. Cap and trade is making them look overseas. The net result of CAT will be nill as companies just move their business to countries that dont participate. If you think that all countries will participate then you are just dreaming b/c there are many countries that will drool over the prospect of getting businesses to build there. Take a long hard look at the (lack) of textile businesses in the USA. We used to have a ton of them. Now only a handful. Heck only a few schools still have a textile program. I enjoy your blogg though sometimes i forget to come and visit.

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