Nearly everyone seems to cheer a market-based cap-and-trade system for emissions. And Europe, as usual, leads the way. But a closer look at the numbers shows how politics taints the end results. It's true that the United States emits more carbon than the continent. Yet the increase in emissions over the past decade is substantially smaller when you consider the growth in population (Europe's population is flat) and the growth of the U.S. economy (about 40 percent faster). What's more, EU corporations and eastern developing nations lobbied--and got--remarkably lax caps. In fact, the actual emissions from the EU fell below mandated caps. As a result, the cost for emitting 1,000 tons of carbon today is about 11 euro cents. This doesn't make for much of an efficiency incentive. Now imagine the corporate lobbying interests that would descend on Washington if the United States adopted the same cap-and-trade system. The market mechanism is the best solution currently available for assuring equity. At least, it will get the greatest number of many, many special interests into the game. But without political resolve, its efficacy is as ethereal as carbon dioxide.
Source: Wall Street Journal
