If you are an environmentalist you are concerned about emissions; methane emissions from cows, sulfer dioxide from industry and most importantly carbon emissions from everyone and everything (but really just business.) Carbon and five other gases were recently labeled pollutants because they supposedly contribute to Global Warming.
Human beings produce CO2 every time we exhale. Other supposed “greenhouses gases” like SO2 are produced naturally and tossed into the atmosphere by things like volcanoes. Despite this, environmentalists are convinced that industrial emissions are ruining the planet and are bringing about Global Warming (rebranded Global Climate Change because, frankly, the planet stopped warming a few years ago BUT IGNORE the COOLING). In this ‘Global Warming is caused by human pollution’ scenario, carbon is king and now considered enemy number one!
The problem? Carbon and other emissions are needed to produce just about everything humans need or want; once again just to drive the point home, humans create carbon every second of every day just by breathing. You probably also think of cars and smoke stacks, both of which are seen as evil by enviros but the reality is everything from your iPod, to the clothes you wear, to the food you eat leaves a “carbon footprint” which has become the buzzword of late leading radical environmentalists to seek a state of “carbon neutrality” or to offset their impact on the environment by doing things like planting trees.
Easier said than done.
Think for a moment about cars, which burn fossil fuels to run. Even if every single car or truck in the United States were converted to an electric car, whining from environmentalists could not end. The manufacture of every single part that makes a car, from fuses to tires to engines to headlights, produces emissions. The assembly of cars produce, yes you guessed it, emissions. The manufacture of every single machine that assembles cars, produces emissions. The energy that powers electric cars, produces emissions. Even solar panels and windmills leave behind a dirty carbon footprint.
Fact: Car emissions represent only a quarter of all carbon production in the US.
This brings us back to carbon neutrality and cap and trade. The idea is simple, limit the amount of emissions produced in the world by limiting what large scale producers of carbon can release, (cap). Then allow these evil polluters a way they can benefit by lowering their emissions. Theoretically it might be a lot easier for one business to simply lower their carbon output below the limit. They can then sell the remainder of their carbon allowance to other companies, (trade).
Think about it this way, the amount of carbon or other emissions (I am just going to say carbon now as a catch-all for emissions) we as a species can produce is literally unlimited or limited only by demand and the ability to meet or exceed demand. Environmentalists figure, “If carbon is warming the planet, why not just put a limit on the amount of carbon people are ALLOWED to produce.”
However while we might set a limit, demand for things that produce carbon still exists. We want iPhones, cars, Naval vessels, tooth brushes etc. You might be wondering, how would we decide between roads in Zimbabwe and XBox’s? In many versions of cap & trade only certain businesses and industries are targeted. These are businesses environmentalists don’t like and don’t believe are necessary. So chances are solar panel manufacturers and Google can produce as much carbon as they like while automobile manufacturers will be held accountable for how much gas they are releasing in the atmosphere.
Cap & Trade is as much about phasing out carbon as it is phasing out certain kinds of business. More on that in a minute.
As for the marketplace and how it functions, there is a lot of math involved that is somewhat arbitrary, if you are asking “How does one decide how much carbon CAN be produced and how much each industry is given,” well, that is complex.
My cynical answer is simple, it is all based on nonsense informed by industry and science but with a lot of voodoo made to look scientific, fair and business friendly. So I won’t go into it. If you want to know more about the exact in’s and out’s check out the following links:
- How Stuff Works: Carbon Trading
- NPR Cartoon Series on Carbon Global Warming: It’s All About Carbon
- Carbon trading won’t stop Global Warming
- Cap & Trade 101 (Straight from the mouth of liberals)
- Cap & Trade Delusions
So cap and trade can be summed up as follows. Government in some way puts a limit on the total amount of carbon that can be produced and the total amount that can be produced by certain industries. The overall goal is to decrease that limit over time until the effect of human carbon output on the environment is negligible and won’t kill us all with Global Warming, even though it is looking less likely that Global Warming actually exists.
To blunt the economic, political and social impact of this cap, Government supports the creation of a regulated marketplace that benefits those who produce less carbon while giving those who produce the most carbon time to change their ways.
The Problem
So this probably sounds all well and good but there is an enormous economic impact. Our economy, meaning our desire for goods, directly influences the amount of carbon that is produced. Don’t believe me? During 2008 carbon emissions actually dropped by 2.8%. The reason? Largely because of a 2.2% drop in energy consumption from high oil prices last summer and the current economic slowdown.
While everything humans do produces carbon, environmentalists are mainly concerned with the energy sector. Because everything that business does is dependent on energy, our entire economy is influenced by energy’s cost.
If energy producers suddenly have to pay whenever demand exceeds the limit set by cap and trade, the cost they must pay, which many see as essentially a new tax, will be reflected in the cost of energy to all. The higher the cost of energy, the more all other business will have to pay to produce their products. This cost will be passed onto consumers, the same consumers who are also paying more for the energy they use to run their homes and drive their cars because of cap and trade.
One can also reason that if the cost of doing business for employers goes up, employee compensation will go down. As the cost of consumption rises, income could lower, resulting in a slowdown of demand for production, resulting in a loss of jobs.
This, however, is not the biggest problem with cap and trade. While the United States is a large producer of carbon, we are not the only producer and there is a very large nation, China, sitting out their 100% opposed to participating in this scheme. Attempts to limit carbon output in the United States without an equal attempt to do so in China, as well as nation’s like India and Russia, could not only be devestating for the environment but for American workers.
Think about it this way, if a public water system had a limited amount of water they might cap your use and ask that you refrain from watering your lawn or washing your car. If a new Super Wal-Mart were built across the street and they were told the opposite, that they would be economically rewarded for using as much water as possible, the effect would be an empty public water system, a happy Wal-Mart and you would be left unhappy and very thirsty.
China would benefit greatly from our nation adopting a cap and trade system. If the Western world puts limits on industry, these producers would find a welcome home in the East. We have seen companies flee to China for decades to avoid high taxes and the high cost of labor. If suddenly faced with a carbon tax, what choice would they have but to move more or all of their business overseas?
The other big problem
It goes further than that though. You may have already seen some high profile members of the business community come out in favor of this system on news channels like CNBC or in op-ed pieces. There is a public relations campaign occurring right now that will only grow over time. The main theme, “Look, conservative business leaders are for cap and trade, this must be good for all!”
Why would business leaders who know they will have to pay higher prices for energy support this system? It is simple, many of the very large businesses in our country, corporations like Wal-Mart, don’t produce goods with American workers and under American laws, they produce them in China.
In essence this cap and trade system is not so much about defeating carbon as it is defeating large sectors of American industry. Corporations like General Electric, who will no doubt supply much of this “green” technology, will thrive, while smaller corporations that cannot change their business models will be destroyed.
Notice, if you will, that almost all discussions of General Motors, which is now owned in large part by the American people, center around “green” technology, hybrid and electric cars.
As a further reward for those businesses who get on board this new “green” economy, the cap and trade system provides one other precious piece of the pie. This system will artificially inflate the cost of everything that compete in the marketplace with these “green” technologies. Right now “green energy technology” cannot compete in the marketplace with oil, natural gas, hydroelectric and nuclear power because of cost to consumer and a marketplace that was developed over the last hundred plus years.
A cap and trade system will force corporations to push the cost of doing businesses onto consumers thereby making “green” technology cost comparable. Throw in what will no doubt be large government subsidies and you can achieve the kind of large scale change Obama promised he would bring to our energy sector. The only problem is this change will come at great cost to Americans, the loss of jobs, destruction of capitalism and endless government control.
Large corporations will not curtail their real carbon production, rather they will move more of it offshore at the cost of American jobs. Large corporations will fire American workers and hire more Chinese to run their operations. Meanwhile, green technology, will also be produced overseas hiding the true environmental impact from its production.
Much of cap and trade and Obama’s energy policy is sold under the new marketing strategy of “clean energy jobs” that are sold as American jobs. There is, however, nothing to suggest that any of these jobs will actually employ Americans. Worse, there is ample evidence to believe that most of this green technology will actually be produced in China without worry for the amount of carbon it will take to produce it.
That, in essence, is cap and trade and it looks likely it will be brought to reality in some form or other.
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