A Question About Cap and Trade
Hillary’s new energy plan prosposes a cap and trade system for carbon emissions, which to it’s credit, will auction off the permits instead of just giving them away:
Hillary will establish a market-based “cap and trade” system to provide an overall framework for reducing greenhouse gas emissions. The system would auction 100% of allowances to ensure that utilities and other companies do not obtain a windfall. The system would also provide flexibility for companies to bank, borrow and trade allowances. The proceeds from the sale of allowances would be used to provide tax benefits for working and middle-class families and energy intensive industries, as well as incentives for energy efficiency and renewable technologies. The cap and trade approach was used successfully to limit sulfur dioxide and reduce levels of acid rain in 1990s to reduce annual sulfur dioxide emissions by 7 million tons below 1980 levels.
Though the entirety of the plan is ambitious and generally quite good, I’m truly mystified why so many environmentalists and policy wonks think this type of cap-and-trade is better than a simple, universal carbon tax. This could be a misunderstanding on my part, but how would a program where we set a carbon cap and sell the permits to companies that emit carbon affect transportation emissions, which are 1/3 of total US carbon emissions. Would I have to buy a permit in an auction to fill up my car? If it wouldn’t work that way, then how else will a cap and trade system effect emissions from automobiles?
Clinton is also the candidate closest to corporate lobbyists and interests, meaning that I’ll need a little more than her word that a cap and trade auction wouldn’t be subject to the same tinkering and misevaluation of permit values that have plagued other cap and trade schemes. But all in all, it’s a good plan. I’m just really curious to see how a carbon permit auction would increase the price of personal carbon usage for transportation.
