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Cap and Trade: A Tangled Web of Good Intentions and Bad Policy - Part 1 (Blog Post)

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  • Michael Hoexter
    Dear Friends and Colleagues, After much thought and a couple refinements of these ideas, I ve decided to write and publish some reflections on cap and trade,
    Message 1 of 1 , Oct 26, 2009
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      Dear Friends and Colleagues,
      After much thought and a couple refinements of these ideas, I've decided to write and publish some reflections on cap and trade, which has in my opinion captured way too much mindshare in the policy and climate action community.   I have been hesitant to engage in this type of criticism at this late hour but it appears to me that there is no alternative but to put this out there.  At the minimum maybe it will add something to the critical writing on cap and trade that is already available and inspire revisions of cap and trade instruments for perhaps the better.  It seems to me though that replacement of cap and trade with an integrated package of measures is the way to go. 

      If this were another matter, I might treat the policy preferences of incumbents and powerful political and economic actors as part of an established reality but apparently we have very little time to act on climate change.  For instance, Paul Krugman of whom I am critical with regard to his stands on cap and trade, may very well be right that the "Rube Goldberg" contraption of a health reform that has the highest likelihood of passing will lead to better things down the road.  I am not so sure if the passage of a corrupt cap and trade bill will have the same outcome, especially given the timeline that climate scientists are showing us.  

      I consider my position to be a defense of an industrial capitalism tasked with a transformation of our energy and transport infrastructure against the pull of a financial sector that is impatient with real investment and "coked up" on the hope of quick gains in market arbitrage and trading.  Maybe in another time and place, such a trading-based financial sector would be appropriate.  However, it appears that climate policy designers have not learned the lessons of 2008 and are setting the fate of the earth on a failed economic model.

      The first installment of my post on cap and trade can be found here:


      In this part, I summarize the history of cap and trade, emphasize how questionable its achievements have been in the area of reducing emissions (thanks to Gar Lipow for his work in this area), and locate 10 fundamental flaws in cap and trade in almost every possible implementation of it. 

      Please share your thoughts and comments!

      All the best,

      Michael

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      Michael Hoexter
      Terraverde - Energizing Green Markets
      Belmont, CA 94002

      Blog:  www.greenthoughts.us
      Tel: (650)274-9360
      Fax (650)649-1788
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