Environmental Engineering Reference
In-Depth Information
There is some experience with Cap and Trade.
I already mentioned the effective program to reduce
SO
emissions in the United States. In the EU, Cap and
Trade began in
as a way to meet the European
commitments to the Kyoto Protocol. The plan was to
operate the system until
, and then modify it as
experience indicated was necessary. In the
rst round,
because of an over-allocation of free credits, the price
for carbon emission permits collapsed and the program
did not work well. It has been restarted with tighter
controls over allocations, but the price per metric ton
(tonne) of CO
has collapsed anyway to
€
from the
desired
.
In the United States, industry has been advocating a
hybrid plan which is basically Cap and Trade with an
escape clause. They worry (not unreasonably) that the
cost of emission permits may get to be too high and so
want a system whereby the government will issue more
permits as needed to keep the cost below some speci
€
ed
limit. Whatever is decided,
it would be best
if
the
experimental nature of
the program was recognized
and a speci
c time for re-evaluation was included in
any legislation.
When it comes to a choice between the options, an
emissions fee has one enormous advantage: it is very
simple to administer. The corporate world can afford
to employ many more very smart people than the gov-
ernment can, and they are extraordinarily good at
finding loopholes in regulations. The more complicated
the legislation, the more loopholes will be there to
be found by people who get paid lots more than do
government experts.
