Tuesday, February 12, 2008

The Coming EU Energy Crisis

From this post:
...in the case of energy companies, many who support cap-and-trade do so in the expectation that they’ll get a boatload of carbon permits from the government—for free!
Permits represent an artificial, government-created scarcity in the right to produce energy. The right to produce energy is very valuable, especially where government restricts it. The tighter the cap, the more valuable each permit traded under the cap.

Nobody wants to have to buy carbon permits, but lots of companies hope to sell permits, especially if they can get them at no charge.
Update: A related post at Coyote Blog is here, entitled "Cap and Rent-Seek".

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