There’s an excellent guest post by James Handley at the Carbon Tax Center — which closes as follows:
But even then, two big problems with cap-and-trade will remain: price spikes and fat-cat traders.
The “safety valve” is a way to blunt cap and trade’s price spikes — simply open the valve if the price hits a pre-determined limit. Helpful, but a long way from a tax: the smooth, even marathon pace that gets us to the finish line. Plus, the safety valve eliminates the emissions reduction “certainty” touted by cap-and-trade proponents.
And the traders. As the ClimateWire article shows, they’re ready to eat our lunch. Why should we build those transaction costs into our system? (And many of those costs will be hidden and would provide opportunities for gaming the system.)
Remember, it’s a marathon. We can’t afford the jackrabbit starts of price spikes and the extra weight of traders.
Commenter Lana posted a link to an online debate she started: Is Emissions Trading an effective way to deal with climate change?. Looks like a good venue. We could use some help on the debate — nobody has yet countered cap and trade point for #1 It is Cost-Effective.
I would prefer a debate that is framed more narrowly “Is a revenue-neutral carbon tax more effective than cap-and-trade?”
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