Cross-posted on Horse Head Soup:
Okay, maybe I'm just dumb. But I'm not sure I understand what is so great about cap and trade.
First, let me make sure I have it right. As I understand it, cap and trade sets a limit on the amount of carbon emissions a company is allowed to produce. If a company goes over that limit, it can purchase carbon credits from another company that is below the limit to make up the difference.
So Company A puts out more carbon than they are allowed. Company B puts out less than they are allowed. So Company A buys credits from Company B, and everyone is happy and the Earth is protected and we all hold hands and march boldly into our clean, green future, right?
Does anyone else see a problem with this?
It seems like all cap and trade does (assuming I've got it more or less right) is allow polluting companies to keep polluting, while rewarding non-polluting companies for not doing something they weren't doing to begin with. In my example above, there is still the same amount toxic crap spewing into the atmosphere as there was before. No one is doing anything different than they were doing before. The only difference is that someone has a piece of paper from Uncle Sam saying it's okay.
It's kind of like giving everyone a license to commit one murder each. But you can still murder more people and get off scot-free. You just have to buy a murder credit from someone. Bam! Murder problem solved, right?
Except it's worse than that. Because what's to prevent unscrupulous people from setting up bogus companies just to get carbon credits that they can then sell? Hell, I don't produce a lot of carbon. Maybe I should become Jon Stafford, Inc. and get paid for it. Finally! A way to capitalize on my lack of productivity!
Am I missing something? Because it looks like all cap and trade does is move papers from one pile to another. Instead of bureaucratic sleight of hand, wouldn't it make more sense to set carbon limits and impose penalties on companies that don't follow them? You know, like they were laws or something?