Swipe-card plan to ration consumers' carbon use

[David Farber <dave () farber net>]

Begin forwarded message:

From: Brad Templeton <btm () templetons com>
Date: July 19, 2006 7:09:12 PM EDT
To: David Farber <dave () farber net>
Cc: ip () v2 listbox com
Subject: Re: [IP] Swipe-card plan to ration consumers' carbon use

On Wed, Jul 19, 2006 at 05:37:28PM -0400, David Farber wrote:
> First, consider that rationing is a completely irrational response to
> a shortage.  Rationing is predicted on the assumption that it's fair
> for everyone to have the same allocation of a resource.  In the same
> sense that nations typically behave towards each other like toddlers,
> within a nation, the politicians seem to treat citizens like children,
> where every child gets an equal sized piece of cake.

This is true, but pollution credits actually have some interesting
aspects.

From my viewpoint, nobody has any right to pollute my environment,
nor I to pollute yours.   Once you accept the premise that CO2 will
destroy the world's climate, it applies.

Our rights are in fact equal in this case.  They are all zero.

However, we could never build a society like the one we appear to
want using that regime.  In a libertarian ideal, you would have to
pay everybody whose environment you will damage in order to get
their permission to do so, but we would get too many people who
would not accept any affordable price.

So we need a system which accepts there will be some pollution,
ideally some minimum, and compensates those who suffer from it.
With localized pollution, this is mostly a specific group.  With CO2,  
it's
the entire atmosphere, and the whole population.   However, we are
limited to what we can do within nations.

One can trade money, of course, or one can also, with trading
credits, trade a bit of one's "right" to pollute.   As this
is not actually a right, but a privilege granted by fiat,
it can arguably be the same for all.

(In reality, these systems are often designed allocating right
to pollute based on historical actions, and credit is gained
by reducing from past levels, not by meeting specific targets.)

The trading systems attack the problem in an interesting way.
Whatever minimum we set requires that money be spent reducing
pollution.   The ablity to trade moves that money to the places
where it is most efficient.

For example, while spending $2,000 extra on a hybrid car may
cut emissions by a certain amount (and make you feel good
about it every time you drive) it may be the case that
due to economies of scale, spending that $2,000 to make
a big factory have cleaner output may cut emissions by
tenfold.   (You just don't get the green fuzzies.)  A
credit trading system pushes the money to where it will
do the most good, and lets the powerful tools of a market
drive this.

I sometimes for amusement tell Prius buyers they are gross
polluters, because with the extra money they spent on their
Prius, they could buy carbon credits in today's market
able to offset driving a Hummer around the planet 30 times!
However, this is because in the USA, carbon credits have
no force behind them and are priced artificially low.
In addition, as gas moves to $4, the Prius starts to no
longer cost extra, since it eventually saves more money
on gas.   But the remarkable thing is how cheap the
credits, sourced from other places, including tree farms,
are.


> our carbon to reduce our carbon emissions.  I own 225 acres of land.
> It has a growing forest which is pulling carbon out of the air.  I'm a
> hero -- shouldn't I get a higher carbon allowance?  What if I can

Actually, you do in many of the carbon trading systems.   Anybody
who sequesters carbon can sell credits.

> An equal share is not obviously fair; not at all.

The only fair share is actually zero, and that's equal.


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