Cap and trade, with handouts and loopholes

21 May 09

Al Gore calls it “one of the most important pieces of legislation ever introduced in Congress”. Joe Barton, a Republican congressman and global-warming sceptic, says it will put the American economy in a straitjacket. For something that practically no one has read, the American Clean Energy and Security Act provokes heated debate. It would establish a cap-and-trade system for curbing carbon-dioxide emissions, thus transforming the way Americans use energy. President Barack Obama has long argued that America should join Europe in regulating planet-cooking carbon. But he has left the details to Congress. The most straightforward and efficient approach to reducing carbon emissions—a carbon tax—was never seriously considered.So Mr Obama proposed something very similar to a carbon tax, albeit slightly more cumbersome. Industries that emit carbon dioxide would have to buy permits to do so. A fixed number of permits would be auctioned each year. The permits would be tradable, so firms that found ways to emit less than they were entitled to could sell some of their permits to others.
http://www.economist.com/opinion/displaystory.cfm?story_id=13702826

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