Cap and Trade and the New York Times Op/Eds
Yesterday the New York Times ran two contrasting op/eds dealing with the efficacy of cap-and-trade schemes to control various unwanted emissions. Many supporters of establishing an international cap-and-trade scheme to ration carbon dioxide emissions as a way to limit man-made global warming point to the "success" of America's sulfur dioxide cap-and-trade scheme. The SO2 scheme was devised to handle the problem of acid rain.
One such happy cap-and-trader is Times columnist and economics Nobelist Paul Krugman who, in his Monday op/ed "An Affordable Truth," declares:
The acid rain controversy of the 1980s was in many respects a dress rehearsal for today's fight over climate change. Then as now, right-wing ideologues denied the science. Then as now, industry groups claimed that any attempt to limit emissions would inflict grievous economic harm.
But in 1990 the United States went ahead anyway with a cap-and-trade system for sulfur dioxide. And guess what. It worked, delivering a sharp reduction in pollution at lower-than-predicted cost.
On the same page on the same day, James Hansen, a scientist who is a well-known long-time proponent of the idea that man-made global warming portends disaster for humanity, writes an op/ed, "Cap and Fade" where he begs to differ:
Supporters of cap and trade point to the 1990 Clean Air Act amendments that capped sulfur dioxide and nitrogen oxide emissions from coal-burning power plants — the main pollutants in acid rain — at levels below what they were in 1980. This legislation allowed power plants that reduced emissions to levels below the cap to sell the credit for these excess reductions to other utilities whose emissions were too high, thus giving plant owners a financial incentive to cut back their pollution. Sulfur emissions have been reduced by 43 percent in the two decades since. Great success? Hardly.
Because cap and trade is enforced through the selling and trading of permits, it actually perpetuates the pollution it is supposed to eliminate. If every polluter's emissions fell below the incrementally lowered cap, then the price of pollution credits would collapse and the economic rationale to keep reducing pollution would disappear.
Worse yet, polluters' lobbyists ensured that the clean air amendments allowed existing power plants to be "grandfathered," avoiding many pollution regulations. These old plants would soon be retired anyway, the utilities claimed. That's hardly been the case: Two-thirds of today's coal-fired power plants were constructed before 1975.
Cap and trade also did little to improve public health. Coal emissions are still significant contributing factors in four of the five leading causes of mortality in the United States — and mercury, arsenic and various coal pollutants also cause birth defects, asthma and other ailments.
Yet cap-and-trade schemes are still being pursued in Copenhagen and Washington.
Just one further note: Krugman claims:
The truth is that conservatives who predict economic doom if we try to fight climate change are betraying their own principles. They claim to believe that capitalism is infinitely adaptable, that the magic of the marketplace can deal with any problem. But for some reason they insist that cap and trade — a system specifically designed to bring the power of market incentives to bear on environmental problems — can't work.
Actually, as I recall, it was "conservatives" and free market types who were proponents of creating an SO2 market while the big environmental lobby groups resisted the proposal for years.
Considering the unlovely spectacle of massive rent-seeking that is already taking place on Capitol Hill as big corporations jostle to get as much goverment largresse as possible from carbon rationing, I give Hansen a technical win between these dueling op/eds.