Carbon Tax: Our ACES in the Hole for Real Change

The current version of the American Clean Energy Security Act (ACES) must not be signed into law. At the very least, any proposed environmental legislation should do no harm. That would not be the case with the ACES if the cap and trade scheme remains in the bill.

In theory, a cap and trade scheme would put a high enough price on greenhouse gas (GHG) emissions to encourage energy efficiency and investment in clean, renewable energy. Cap and trade would do this by setting emission limits (a cap) on GHGs on industry.

Industries that reduce their GHG emissions below these caps could sell their unused allowances in the form of permits or carbon credits to industries that exceeded their caps. Putting a high price on excess GHG emissions would encourage polluters to clean up their acts due to financial incentives.

If cap and trade is enacted by the United States and continues to be the primary mechanism to reduce GHG emissions by the rest of the world, our planet will be doomed to irreversible catastrophic climate change.

For over a decade, the countries that signed the Kyoto Protocol have used the cap and trade system.

The vast majority of those countries didnt achieve even reduced mild goals due to exclusions, unregulated carbon offsets that failed and other loopholes. Other countries just ignored the emission goals because there was no enforcement under Kyoto.

In fact, according to J. Houghtons 2004, Global Warming: The Complete Briefing, the countries whose

GHG emissions fell by the greatest margins those of the former Soviet Union did so because of economic collapse and not through compliance with policy.

Other dangers of a cap and trade scheme include: (1) Unpredictable price volatility placed on the value of carbon by Wall Street speculators, (2) Overhead costs and complexities, including inviting lobbyists to delay implementation and (3) Potential corruption through investment in sham technologies that dont reduce GHG emissions and investment in fraudulent carbon offset schemes.

A better mechanism for putting a price on GHG emissions and reversing climate change would be a carbon tax with a 100 percent refund.

A carbon tax would be assessed on industry at the point of carbon production (a mine or oil wellhead).

Consumers would be taxed a set amount on each ton of carbon dioxide they emitted per year.

A 100 percent carbon tax refund would mitigate most of the financial burden of increased carbon costs to the consumer.

For example, if an individual paid $3,000 a year in carbon taxes, theyd get that $3,000 returned to them at the end of the year or even on a monthly basis.

A carbon tax would be simpler to administrate. Plus, it would eliminate the potential for greedy Wall Street speculators to game the system by artificially manipulating the value of carbon credits.

Cap and trade has had a 10-year record of failure. Its time to try a solution that has a chance of succeeding.