I’m all about Obama’s budget moves, but pretty soon folks will start to ask about the budgetary assumptions based on an emissions Cap and Trade Market that doesn’t really exist yet.
I like that it’s in there, but when you trumpet numbers based on god knows what model of something that doesn’t exist, what are you doing?
This market-spawning policy is pretty tough to make happen without rewarding polluters and therefore could easily be supplanted by another system in the mean time or soon after launch. What happens to the budget then?
If the Cap and Trade market collapses, the whole thing would just amount to pay offs to polluters. That’s pretty risky. There should be a more reliable policy that could ensure progress on pollution regardless of the result of the cap and trade experiment.
Cap and Trade plus/vs. Cap and Share
An un-implemented, yet impending Cap and Trade Policy in large part constitutes a subsidy for polluters – the worse you can get right now, the more you’ll get paid once the cap is on.
The very idea that such a system is on the way has really provided incentive to blindly increase pollution for several years now. Lord knows what the market’s response has actually been, but incentives tend to work.
If Cap and Trade is really to be the policy eventually, one can understand why we export ecological fear while increasing domestic pollution with impunity NOW: it positions us to take most advantage of the cap. So if it is coming, start now, please! Before things get even dirtier.
Cap and Share seems like a great way to get powerful results but with less important side-effects as far as I can see it. The idea is essentially a revenue share program that collects based on a pollution ‘grade’, waits a year, then redistributes to contributors based on a new grade, creating an incentive reduce pollution year-to-year without taxes or a fake market. He’s a hypothetical example of such a system:
Compel polluters or other sorts of environmental ‘degraders-by-design’ (like with like as pools) to pay (let’s say) 1% of revenue into a fund annually that invests the money until the following year in the safest possible place that yields interest, with the requirement of redistributing it the following year, plus what interest is not spent on managing the fund (wait for the twist). This secures the money, so leveraging it could still be an option to contributors.
Contributions are to be made by a standard formula by pool, something based on units pollution balanced by benefit (revenue dollars perhaps). By standardizing the formula and pooling industries and pollutants, the government would not be in the business of picking winners and losers. The polluters would be determining their own fates:
Distributions would be along the same formula as the Contributions, but with the following years’ measurements so polluters are provided with incentive to reduce emissions and to do so in competition with their own industry rivals:
In the materials game especially, a 0.5% advantage over competitors could mean everything.
While the government might choose to assist with the initial payments to help things along, they should see no further costs as administration of the fund should be required to live within the interest on the fund for the year.
Oh, and if you cheat, you are publicly flogged, nationalized, shuttered or something else effectively draconian.
I’m kinda in love with this one, and it has the benefit of being pretty politically palatable and could supply a more reliable incentive to reduce pollution than a Milo Minderbinder Market experiment that I hope works desperately (and comes ASAP), despite my doubts and reservations.
What do y’all think?