Widgets Magazine


The merits of carbon cap and trade

With the 2015 United Nations Climate Change Conference in Paris approaching quickly, there is a noticeable increase in public discussions about ways to reduce global CO2 emissions. Climate-related announcements made by Chinese President Xi Jinping during his recent visit to the United States have also focused greater attention on this topic. Even though increasing numbers of policy makers and an overwhelming percentage of scientists are convinced of the urgency of responding to climate change, it is surprising that public concern about the problem remains relatively low. In fact, a recent Pew Research poll found that even though 61 percent of Americans believe climate change is a real phenomenon, they ranked mitigation measures near the bottom of priorities for President Obama and Congress.

Some of the reasons for this discrepancy stem from the fact that climate change is a relatively slow process, with fewer tangible near-term effects when compared with pressing economic and homeland security concerns. A further public perception issue arises from the fact that measures to curb CO2 emissions are often seen as having an unfavorable impact on the economy.

In order to allay these concerns it is important that we first acknowledge the incredible extent to which our society in general is dependent on CO2-emitting fossil fuels. While zero-carbon — and even novel negative-carbon — green technologies are currently being developed, experts in the field do not anticipate that these energy sources will become cost-effective and abundant alternatives to fossil fuels within the next several decades.

Climate mitigation techniques such as geologic carbon capture and sequestration (CCS) — which can address the problem of climate change while still allowing the nearly undiminished use of fossil fuels until alternative energies are developed — are of growing interest to researchers. However, the technical and economic efficacy of CCS has also been questioned by some.

In addition to being expensive, long-range computer simulation studies indicate that CO2 captured and sequestered in saline aquifers has some probability of leaking back into the atmosphere in the future. And though leakage times are measured in hundreds — or even thousands — of years, it is an important consideration for policymakers and the public at large. As a member of a generation forced to cope with the environmental problems our predecessors have left for us, I am opposed to passing on problems to later generations that we found difficult to solve during our time. And thus, I believe that, though promising, CCS would have to be set aside as an answer; we must look elsewhere and to other mechanisms to mitigate climate change.

Given this perspective I believe that our attention is best directed at investigating policy measures that could incentivize businesses to decrease emissions. The two main economic policies that have received consideration are the imposition of a carbon tax and the introduction of a “carbon cap and trade” scheme.

Cap-and-trade has, in particular, been in the news recently because the Chinese President Xi Jinping announced, during his recent visit to the United States, that his nation would be implementing it, starting in 2017, to mitigate climate change. Though this news was welcomed by activists and policymakers, it came as a surprise to many, since Chinese economic and political policies are typically seen as being less progressive by American standards. With this bold policy move China now appears to be taking the leadership role in limiting carbon emissions in an economically sensible way.

I believe China’s recent move is a landmark event in climate mitigation history. American policymakers have long argued that it was pointless for the U.S. to act unilaterally on climate change without China also agreeing to take similar action. This excuse is no longer viable, and the next move on the chessboard is undoubtedly America’s to make. And America must make a move — and make it fast, because the percentage of global emissions contributed by the U.S., falling at around 15 percent, is second only to China’s which falls at around 29 percent.

However, it is important to note that cap-and-trade is a somewhat dated idea, and this policy innovation had in fact pioneered in the United States — and it was used successfully in the 1980s by American companies to limit sulfur-dioxide emissions that were responsible for acid rain. This past experience indicates that cap-and-trade policies can spur technological innovations as companies try to profit by reducing their emissions and selling their emissions credits to others whose emissions control efforts are lagging.

Some critics of cap-and-trade argue that it might lead to instability in energy prices, and indicate a preference for a carbon tax. Other proponents of the carbon tax suggest that cap-and-trade is overly complicated, and that companies can manipulate it and defeat its real purpose. However, I find carbon tax problematic because companies will pass on the financial burden of the added tax to consumers. The beauty of the cap-and-trade scheme is that it appeals to market mechanisms that will encourage competition and innovation.

So, after a careful consideration of the options at-hand, it appears that carbon cap-and-trade seems to be the best economic policy to regulate carbon dioxide emissions and mitigate climate change. China made a smart move on Sept. 25th. The question is: Will the U.S.? Who will lead the agenda at the upcoming UN Climate Change Conference in Paris?

Contact Ramya Balasingam at ramyab ‘at’ stanford.edu.

  • Grant Giske

    The problem with this entire article is that there is no scientific proof that an increase in carbon dioxide in the atmosphere leads to climate warming. In fact, the data for the past 17 years suggests that it does not. An increase in CO2 in the atmosphere actually has a very positive influence in that it accelerates plant growth thereby increasing food production. It is sad that people associated with Stanford still cling to the discredited computer projections of the 1980s and 1990s.

  • Anonymous

    The link between atmospheric carbon dioxide and the greenhouse effect in Earth’s atmosphere has been documented since the 1800s, by Svante Arrhenius for example.

    Today, you can see a correlation between increasing atmospheric carbon dioxide concentration and increasing global average temperature. This correlation holds for models of the ancient atmosphere, based off of ice cores.

    The study you bring up was part of a campaign by fossil fuel companies. Is there a correlation between increased atmospheric carbon dioxide and increased plant mass yield? Yes. But that increased yield comes with consequences caused by a warming planet.

    If there is no proof that an increase in atmospheric carbon dioxide leads to climate warming, then I would ask you to discredit several hundreds of studies and the 97% of climate scientists who are of the opinion that anthropogenic carbon dioxide is a major issue.

  • Grant Giske

    Remove from that 97% those who receive funding to support the claim and there is virtually no one left and they are out numbered by thousands of honest scientists not on the government doll for climate change who support the claim that the earth has not warmed over the past 17 years. Actually, historically according to ice cores and other studies, the increase in carbon dioxide follows an increase in global temperature rather than lead and cause it. When you wake up this morning, take a look up into the sky. That giant orange ball up there determines whether the earth will warm or cool. We are just along for the ride. Currently it is not clear if the sun will cause a return to very slow warming (which of course over the long run has been happening ever since the last ice age), whether there will be little change in the near future or whether we will enter a period of a hundred two hundred years of cooling. Given the recent few years of sun spot activity and the status of the current sun cycle, the smart money is on short term cooling. Follow the money. Global warming is all a giant fraud. One more time, each and every one of the computer projections of the 1980 and 90s has been proven false. Why do you continue to ride a dead horse? Answer, also once again, follow the money. There is incidentally, a regular cycle of scientists (seeking grants) studying global cooling, then warming, then cooling. In the 1960s and 70s it was global cooling. Now it is global warming, and it is only a matter of a few years before it will be global cooling. I refer you to one of many articles by Dr. S. Fred Singer, professor emeritus, University of Virginia and a founding director of the Science & Environmental Policy Project. http://www.americanthinker.com/articles/2015/07/a_paradigm_change_redirecting_public_concern_from_global_warming_to_global_cooling.html

  • Anonymous

    Svante Arrhenius, whom I brought up earlier, was of the opinion that Earth was heading into another ice age (the global cooling you allude to).

    Singer denies the link between atmospheric carbon dioxide and the greenhouse effect within the linked article as an “unproven assumption,” whereas there are many studies going back to Arrhenius and earlier that contain that link. Many of these recent studies are the ones that you deny on account of a fiscal link

    Following the money will also lead to scientists who received funding to DENY the claim, namely to climate scientists working for fossil fuel companies such as Exxon (the same companies that funded that study linking atmospheric carbon dioxide increase and increased plant growth).

    I shall not deny the solar cycle – that was responsible for the Little Ice Age some centuries ago with devastated Europe.

    I am also not denying that carbon dioxide has much less of an effect as a greenhouse gas than simple water vapor.

    However, I would ask that you not deny the studies that show that either way we put it, the rate of carbon dioxide increase in the atmosphere is unprecedented. That rate is the issue more than anything else – there have been millions of years with higher carbon dioxide levels than we have today, but none climbing at 2.1 ppm a year without a series of volcanic eruptions.

    As it is, this “dead horse” is supported by such facts as that 2014 is the Earth’s hottest year on record, since 1880. Before that, it was 2005, with most of the top 10 hottest years occurring in the last 15. That, and the fact that the solar cycle ranges from 9 to 14 years since the 1770s, suggesting that solar output is not the only explanation for the current warming trend (because what else changed besides the solar cycle?).

  • Makes no sense

    “However, I find carbon tax problematic because companies will pass on
    the financial burden of the added tax to consumers. The beauty of the
    cap-and-trade scheme is that it appeals to market mechanisms that will
    encourage competition and innovation.”

    This makes absolutely no sense. Both cap-and-trade and a carbon-tax achieve the same result: companies that produce CO2 have to spend more money. Perhaps they’re spending more money on buying up carbon credits, or maybe they’re spending money paying greenhouse gas taxes. Both plans put the same pressure on companies.