The cap and trade system proposed in climate legislation now being discussed in the U.S. Senate is not the most effective way to regulate carbon and reduce emissions of greenhouse gases and its success is doubtful, according to a pioneer of the cap and trade concept.
Economist Thomas Crocker - a University of Wisconsin graduate who came up with the cap and trade model in the 1960s to address an emissions problem at the state level - sees two big problems in the current proposal, according to an article in the Wall Street Journal.
First he doubts the system can work at grand scale given the fact that the problem of carbon emissions is present all over the world. Within this issue, he also says it is not clear how to enforce a permit system internationally because there are no institutions that exist with that power. And even in a situation when all countries enroll, it wouldn't be clear if the limits will be properly enforced across nations and industries.
Second, Crocker notes that quantifying the economic damage of climate change is uncertain and nobody knows how costly it is, therefore nobody knows how severe a cap on emissions should be.
I'm skeptical that cap-and-trade is the most effective way to go about regulating carbon, economist Crocker said according to the paper. He hasn't stopped to efforts to reduce emissions but instead believes an straight tax on emissions is a better option.
Under the cap and trade system proposed in the U.S. climate bill, which is also known as the the Waxman-Markey bill, companies will be given permits to pollute and would be able to buy and sell additional permits in a market.
Core critics of this legislation have said the U.S. enacting the program alone will not make any significant reductions of gases linked to global warming. Countries such as China or India have said they will not implement a cap on emissions fearing it would affect their economic growth.
The U.S. Senate is expected to finish its version of the climate bill by September, the Chairman of the Senate Committee on Environment & Public Works Barbara Boxer told Reuters.