"Why are you so gung-ho about cap and trade? Don't you realize it's a corporate takeover of the atmosphere?"
I’m paraphrasing here, but this was the gist of an audience question I got while moderating a panel on Getting Carbon Market Governance right from Day One at the International Anti-Corruption Conference on Friday. The rest of the discussion was a frank exchange of ideas on how to ensure a workable, transparent carbon market. More on that later. For now a quick response to this question because I think it gets to the heart of why we do what we do. Why are we so "gung-ho" about cap and trade?
We ought to be polluting less because it's the right thing to do, not because someone else limits pollution and hands out allowances to companies. Well, yes. If everyone woke up tomorrow and decided that global warming pollution was bad and that we ought to stop dumping billions of tons a year into the atmosphere, far be it for me to stop them.
Things aren't quite that easy. We clearly ought to be moving toward a more coherent climate ethic. One of our panelists, ethicist Don Brown, made exactly this point. The question is how to get there.
No volunteers, please
Volunteerism simply won't do. Misguided collective action got us into this mess. Properly guiding collective action is the only way out. That means polluters ought to pay. Pollution must not.
There may be academic debates to be had on cap-and-trade versus carbon taxes, but fundamentally the best way in the real world is to put a firm limit on pollution. It worked for combating acid rain in the 1990s. A version of it works for combating overfishing. And the EU has shown that it works for carbon on a large scale.
Carbon markets around the globe
Cap and trade might be "dead" in Washington at the moment, yet it is clearly alive and well and spanning the globe: from existing systems in the EU, the Northeastern US, Alberta in Canada, and New South Wales in Australia, likely systems in California, South Korea and Japan, to systems under discussion or in planning stages in Mexico, Chile, Brazil, and Russia—not to forget China, which will likely at least experiment with cap and trade as part of its 12th five-year plan, in place starting in 2011.
Good for the environment, good for business
Will there be business interests pulling for cap-and-trade? Hopefully. The task is to guide a $5 trillion-a-year fossil-fuel-based energy sector into a cleaner, leaner future. There better be—and there will be—plenty of money to be made in the greener economy.
Yet far from being a corporate takeover of the atmosphere, a well-designed carbon market is a way to make polluters pay for the costs they now shove off onto others by treating the atmosphere as a free dumpster.