Comments on: Saturday / Sunday Links for the Week — August 30-31, 2008

By: natalie shell

natalie shell — Mon, 01 Sep 2008 16:49:26 +0000

thanks Dave :)

By: Chris Corrigan

Chris Corrigan — Mon, 01 Sep 2008 06:49:18 +0000

Hey Dave…thanks for the redraw…I like it! Can I use it?

By: Dave Pollard

Dave Pollard — Mon, 01 Sep 2008 04:45:36 +0000

Hi Chaitanya: Going to an event with Homer-Dixon in a couple of weeks so I’ll ask him. I did like his book. The problem is (a) cap and trade is not enough by itself — there also has to be a carbon tax, and (b) cap and trade systems have proven to be unenforceable. There are no proper standards for verifying emissions and reductions, so in Europe they have found that most of the credits being sold into the market are fraudulent. A higher price in the absence of verifiability will just increase the profit to be made from fraud. And in many countries that have caps and carbon taxes, enforcement resources are so poor, and corruption so rampant, that emissions are rising as quickly as they did before.

By: Chaitanya

Chaitanya — Mon, 01 Sep 2008 03:29:26 +0000

I can see why global warming is not a purely technological problem, in the sense that we cannot count on market system, as it is implemented today, to solve the problem automatically. That is because our current market system does not incorporate the costs of environmental externalities into the prices of goods. So, the current market system, on the basis of simple cost equation, will continue to favor least-cost technologies like coal, and oil.So, the solution is to put a price for the externality, and add it to the cost of carbon emitting technologies. That is exactly what cap-and-trade system does. Now, the key point here is that, the price has to be set high enough, it provides a chance for alternative technologies to take over and compete on a cost basis. If the bar is set low, it doesn't change much. I haven't done a thorough analysis on this, but i've heard estimates that $50 to $100 per tonne of co2 will provide the necessary impetus. This talk by Thomas homer-dixon says carbon trading is one of the best solution available, provided the bar is high enough. http://www.ecoshock.org/downloads/climate08/ES_Dixon_080320_WhoIfNotUs_LoFi.mp3So, i'd disagree with your heading that "carbon trading won't work". It will work, provided the bar is high. Now, whether we set the bar high enough is not a technological problem, but a policy decision our society has to make. That ofcourse, depends on our awareness and system's blindness that the linked article talks about.