Prometheus » Blog Archive » Gaming Cap-and-Trade, Lessons from the EU

The details are complex (always an advantage when trying to avoid policy goals) but the bottom line is that mechanisms like a “price corridor” and “specific fuel benchmarking-auctioning” are ways to avoid the effects of the EU climate policy. The fatal flaw of cap and trade is that the incentives required to secure political agreement invariably undercut the policy goals. The same is true in the U.S. and I expect that any future cap and trade program put forward by the Congress will have more than its share of “safety valves” and “backdoor escape hatches” and “pilot ejector seats” to limit the policy’s potential effectiveness.

When politics and policy move in different directions, policy failure is the inevitable result.

Oregon: A thoughtful Democrat on Oregon's proposed cap and trade

As reported in The Portland Tribune, that's Oregon Senate Majority Whip Dr. Alan Bates, who deserves some credit for actually thinking through this scheme a little. Bates is referring to the estimates that show that if Oregon signs on to the Western Climate Initiative's proposed cap and trade plan, consumer energy prices will rise up to 30%.

But consumer energy price costs rising up to 30% is nothing to Angus Duncan, former chairman of the Oregon Global Warming Commission that worked on the cap and trade plan. Duncan is now president and CEO of the Bonneville Environmental Foundation, a nonprofit organization that trades carbon offsets, that is a key part of the Oregon initiative.