In that case, let’s discuss the merit’s of throwing people out of plane’s without parachutes vs. letting them jump on their own. In the first case, you have to force someone to do something they don’t want yet in the second case you have to willingly let people commit suicide.

Ok, snide comments aside, we could discuss the merit’s of any “x vs y” thing until we turn blue in the face. My point was, why do that if it’s pointless?

http://scanlyze.wordpress.com/2007/10/12/gore-inconvenient-truth-film-contains-nine-factual-errors-uk-court-decision-finds/

MMGW is quite possibly one of the dirtiest political moves ever. I was listening to Bill Nye “the science guy” just today state how he *only* paid $31,000 to convert his Southern California (must be nice) home to solar panels. He wants *every* american to do the same. I’m seriously concerned that any such legislation for a carbon tax/trade scheme is going to pass.

The problem with cap and trade is that you *do* need to estimate the right amount of allowable emissions, and that can be difficult.

Jambarama, you make good points for the difficulty of setting the right quantity with cap & trade, but all of those difficulties are also present with a carbon tax. With both systems, you need to know the right quantity of allowable emissions. But with cap & trade, once you settle on that quantity, that’s the quantity you use for the cap. With a carbon tax, you have to know precisely what change is needed in prices to result in that desired quantity. If new technology is introduced, or there’s some other change in the market, your carbon tax estimates all become obsolete. But the quantity of the cap only becomes obsolete if the right quantity of allowable emissions changes– in which case, your carbon tax is also obsolete. Meanwhile, the problems of choosing the right trajectory are identical for both systems. A tax that increases too rapidly will have the same effect as carbon credits that contract too quickly.

Cap & trade creates a business opportunity for those who can reduce emissions, because they can sell credits to those who have greater emissions. Under a carbon tax, those who pollute more pay more into the general fund, which can go to all sorts of things; under cap and trade, they buy credits directly from those who hold them but don’t need them due to having reduced their emissions. So the money is more targeted at reducing emissions, because those who reduce get a higher percentage of it (at the expense of the general fund seeing less of it).

Does that make sense? Can it work that way? Is it still equivalent?

http://www.brookings.edu/~/media/Files/rc/testimonies/2009/1202_carbon_tax_gayer/1202_carbon_tax_gayer.pdf

With a cap & trade, you also have to pick the right trajectory. If you expand/contract credits too quickly/slowly, the price of credits could fall to nothing (in which case the cap is doing nothing), or skyrocket (as they did in the sulfur dioxide system) and inhibit new businesses.

To add difficulty, the costs to reducing pollution are probably non-linear, but because of the huge stock of CO2, the benefits are probably linear, which lends it self better to price regulation than quantity regulation for volatility reasons.

Anyhow, I think cap & trade is fine for domestic goods when we know the right quantity. For carbon emissions, or international agreements, taxes are simpler, easier to impose, and have similar effects.