After noting that the "idea of a cap-and-trade system for limiting carbon-dioxide emissions in the U.S. has become all the rage," the WSJ’s lead editorial on Mar. 3 observes that:
But this is not, as Lenin once said, a case of capitalists selling the
rope to hang themselves with. In most cases, it is good old-fashioned
rent-seeking with a climate-change patina.
The WSJ correctly recognizes that:
It’s all about the cap, because without it there’s no trading. We don’t
buy our daily ration of oxygen because it’s in abundant supply. Same
with carbon dioxide — there’s no constraint on your ability to produce
CO2 until the government creates one. When it does, it creates an
artificial scarcity. What Duke, Entergy, TXU, BP, Dupont and all the
rest want is to make sure that when the right to produce CO2 becomes
limited, they’re the ones that end up owning the allowances. Because
that would mean they could sell them, and make money off something that previously wasn’t worth a dime.
Of course, if the cap isn’t set low enough there won’t be the type of emissions reductions needed to avoid climate disruption. Similarly, if the government auctions off additional allowances if allowance prices increase over a predetermined amount, the "safety-valve" requested by many companies, then it won’t really matter how high or low the cap is set. You can bet that most of the corporate proponents of cap-and-trade will be fighting for a cap that costs little or nothing, but allows them to say they care about the environment. Moreover, the WSJ editorial doesn’t even mention most of the problems with cap-and-trade. If the U.S. ends up with a cap-and-trade system there will be profit-making opportunities for some alert companies, a lot of self-congratulations by cap-and-trade proponents, but CO2 emissions will keep growing. As the WSJ concludes, "don’t believe for a minute that this charade would do much about global warming."