Cap-and-trade 101 revisited

I write a column for the Pollution Engineering magazine every two months. My August 2009 column was posted on my blog here. Apparently I touched a raw nerve out there with some of my readers. And that’s a good thing. Here is what one reader wrote to me in an emal:

You end your What is Cap-and-Trade article in the current Pollution Engineering with the question… Why should carbon emission control be treated any differently?  My answer… BECAUSE CO2 IS NOT A POLLUTANT OF CONSEQUENCE. 

At less than 400 ppm, CO2 is merely a trace component in the atmosphere and constitutes only about 4% of greenhouse gases.  Human-emitted CO2 is only 3% to 4% of total atmospheric CO2 and the remainder comes from natural sources (and, incidentally, produces lots of vegetation).  Human-emitted CO2, therefore, is at most less than 0.0016 of greenhouse gases.  To suppose that tweaking that figure down some with cap-and-trade could possibly affect the Earth’s climate is an obvious absurdity.  Something like 90% or more of the greenhouse effect is cause by water vapor.  Furthermore, the effect of CO2 is logarithmic—i.e., as quantity increases, the greenhouse effect gradually levels off. ”

The same reader followed up with another email a day later:

Could you go to the next step and tell me what is erroneous in my 2nd paragraph?”

My email reply to him follows:

“For one thing, EPA’s proposed endangerment document is backed up by 171 pages of technical references. I don’t see any technical references to back up your claims.
 
The whole discussion on climate change is about ecological balance. Most scientists will tell you that it does not take much to tip the balance one way or the other. An increase of CO2 from 250 ppm to 400 ppm in the atmosphere could have dire consequences, according to many scientists.
 
Your argument for dismissal of the climate change issue is somewhat akin to the defendant who tells the judge that yes your honor, I did put a bullet in his head but that’s only 0.0003 percent of his total body weight. Don’t think his honor will buy that.”
Anyone else wants to chime in? Your comments are welcome. You can comment here or go to the original blog and post yoru comment there.
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6 responses to “Cap-and-trade 101 revisited

  1. Norman I’m just thinking that with a cap on emissions on US (regulated) companies might not simply cause an export of the polution aspect of manufacturing to developing nations that do not adhere to the same standard. Just look at China for example of this. Their environment is terrible from making goods and chemicals for the rest of developed world. So a US company might be viewed as environmentally responsible all the while sending jobs offshore and actually unceasing pollution. Case in point Walmart!!

  2. Thank you for your comments.

    I am sure there are some US companies that will move their production overseas because of environmental regulations. My experience in working with Fortune 100 companies is that the tipping points for most companies are more related to labor and health care costs rather than environmental costs.

    As for Walmart, it does not “manufacture” anything. It is a retailer. It imports a lot of goods from China simply because many Americans buy them. If no one buys anything from China, there would be no Walmart. So the problem (if there is one) is not so much with Walmart. It is the American consumer.

  3. Norman, thanks for the thoughts. You are right, (in part), that the American consumer is a cause for buying foreign goods. However I think you’re missing an important point. I recall back when WalMart began how Sam Walton touted American brands. It was part of his commercial mantra. Yet later as the reality of lower cost offshore products came to market and our US based companies could not compete they were left with no alternative but to move as well to ‘non-US’ goods. Sure they are just a retailer, as are many other big names, Target, K-Mart, Sears, etc. etc. They simply sell what the public wants. However if we had a balanced playing field in that foreign companies offered the same environmental compliance, the same worker benefits and wages, the foreign goods would be less able to be the primary source for the American public. So now Cap and Trade is just another way for to put a ‘tax’ or a cost on American goods and make them a disadvantaged product over foreign non-taxed goods. Hope this was a bit more direct in thoughts. Welcome your views.

  4. I don’t see how you can have equal wages among different countries when the standards of living are miles apart. Workers in developing countries get paid a lot less because their standards of living are much much lower than ours. They don’t have a high definition TV in each room and 2 cars in their garages. The unionized auto workers in the U.S. priced themselves out of the global market , in my opinion.

    As to cap-and-trade being a tax, it is a remedy to correct an environmental problem in much the same way companies are required by law to dispose of their toxic wastes properly. That is a pollution tax. Without that pollution tax in the form of added cost of disposal, you may find toxic waste on your front yard. Some people believe CO2 is not a pollutant at all. I have discussed that point earlier.

  5. Great, you’re making my point exactly. Now that we’ve come to the understanding that foreign cap and trade is important as a way of leveling the playing field but that those foreign developing countries cannot (or will not, India case in point) adhere to the same high standards as developed nations, then there is another plan that should be on the table.

    Why is a ton of coal burned in China or India any less polluting (given all conditions equal) to a ton of coal in the US. Lets face it we’re in a common atmosphere with pollution of any kind affecting the global village. However the developing countries in themselves lack the ability, the political pressure, the environmental awareness, whatever the case may be to impose equal cap and trade as the US and other developed nations may be moving toward. And as you pointed out their people are less fortunate by material standards than the US citizens or any developed nation for that matter. Their economy could not afford the costs to manage a similar cap and trade. I agree.

    So in effect the developed nations imposes a tougher standard for Cap and Trade and begins to limit carbon output or businesses purchase credits (tax) that in turn go into their products and taxes their customers (the public). There should be a mechanism based upon the carbon footprint of any product coming to a developed country with higher standards, so that all products carry a carbon ‘value’ for pollution control. An example. A petrochemical coming to the US (via fossil fuel burning ship or plane) from any developing nation with a less stringent or lacking cap / trade arrangement is then taxed to a level that creates an equal playing field with US producers of the same material, or of US producers importing the goods from developing nations that endorse a cap / trade. Therefore you get the global community to take note to the importance of a containment in pollution. (by the way I agree that CO2 is pollution).

    I think this sort of system would allow all those affected by Cap / Trade in any developed country to feel less burdened because in effect the entire world is working toward a common goal. Not just a small group of countries.

  6. Thanks again for your coments. I think you are making some very valid points here in terms of fairness and a more equitable global participation in the reduction of CO2.

    One of the arguments about the developed nations taking a lead role in carbon reduction is that they need to set an example for the less developed nations. Only time will tell if this strategy of leadership and inducement will work in the future. The flip side is that if the US does not lead in this global effort, the other nations will definitely not follow since there won’t be anyone to follow.

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