The Wall Street Journal ran a blog piece recently about how the economists who created the cap-and-trade system for emissions don’t think it will work for carbon dioxide, for two reasons.

First, carbon dioxide emissions are global and from many sources, not local with discrete sources, as for sulfur dioxide (the main culprit in acid rain, which was successfully addressed using a cap and trade system).  The international aspect of carbon dioxide emissions makes a cap and trade system addressing CO2 complicated, if not unworkable and unenforceable.

The second problem discussed in this WSJ blog piece “is accurately determining the costs of global warming,” although I do not believe it is necessary that fees for emissions allowances must reflect environmental costs, as the article implies. The basic recommendation stemming from these considerations is that a carbon tax would be more workable than a cap and trade system for CO2.

As we have discussed previously, the success of the acid rain program using cap and trade by no means demonstrates that this system will work for CO2. Technologies for reducing sulfur dioxide emissions were well understood, as was the likelihood that they would suffice. Methods under consideration for reducing CO2 emissions, such as sequestration, are more likely in the realm of science fiction. Not that a lot of research money won’t be spent on it.


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