Wednesday, June 10, 2009

The scoop on Cap-italism and Trade

We’re hearing more and more about cap and trade as the newest, latest greatest way to clean up the environment.

Few can argue that the environment doesn’t need love and attention. Our kids can’t swim in the same creeks we did growing up. Landfills are overflowing. We’re spewing pollutants into the air.

Cleaning up our collective act is a good idea.

But, cap and trade? What is it really all about?

For starters, it’s government regulation based on financial incentives and disincentives. You will be assigned so many pollution “credits,” be it for your company, home or vehicle. If you’re a heavy polluter, you’ll need more. If you’re environmentally friendly, you won’t need all you get.

The objective is to “reward” the environmentally friendly folks with what amounts to extra credits and allow them to sell the credits – for a profit – to the piggy polluters of the world.

Make money if you protect the environment. Spend money if you don’t.

Pretty simple concept – until you look at it a little closer. Who is going to handle the swapping and selling of the extras?

Brokers. Traders. Middlemen.

Yes, my friends, we will be buying and selling emission credits on the “open” market. There is money to be made. Speculators will find a way to weasel in on the action – when do they not?

And the green machine will be turning. The problem is that it will be the wrong green machine.

Companies needing credits will most certainly pay – dearly – for them. That additional cost will once again be passed along to me and you, the consumers.

With all of this money being made, how much of it is designated to be spent on the environment? After all, it is the reason why we’re doing all this capping and trading, right? Not so much of a plan in that area just yet.

If financial disincentive is the only means to effectively reduce environmental damage, then let’s go with the cap only system. No trade.

If you don’t need more credits, you get a tax break. If you need more credits, you get hit – hard – in the pocketbook.

That cuts out the middleman who drives up unnecessary costs to consumers. (Remember fuel speculators and the summer of $4 gas and $5 diesel?) It rewards the environmental stewards and punishes the offenders. No games. Cut-and-dried.

Keeping it simple will keep out artificial inflation and cut back on harmful emissions – without all the money-making games cloaked in feel-good green.