The complexity of cap-and-trade vs. the simplicity of revenue-neutral carbon taxes

The previous post on the ecology of tree planting illustrates the mess that is about to be created by the cap-and-trade schemes. These require vast administrative bureaucracies to determine, measure, monitor both sides of every emissions “trade”. And it isn’t simple to determine whether an activity being sold as an “offset” is in fact. It may simply be scientific rubbish, such as tree planting above 20° latitude. Or as common today, it is an activity that was going to be undertaken anyway, but now is enormously profitable due to scalping an “offset fee” in addition to the already favorable project economics. I.e., tree planting.

A revenue-neutral carbon tax scheme has none of these problems, needing nearly zero administration — no complex determinations. And the taxes can be collected by already existing channels, such as corporate income tax.

Cap-and-trade schemes have already proven to be huge generators of new rent seeking special interest groups. Every single type of “emission offset” will gather around it a host of parties profiting from the activity and lobbying for more and more of it. Again none of this happens with carbon taxes.

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