Posted by
On the Right on Tuesday, August 05, 2008 2:13:34 PM
With cap-and-trade policies coming from the presidential nominees of
both parties, one might think that earlier adopters of these
carbon-trading systems had enjoyed wild success. As Business Week reports,
that’s not been the case in Europe, and people there have begun to
worry. Like a Ponzi scheme, the only way that they can avoid taking
huge losses in jobs and new businesses is if they can convince everyone
to play along:
The continent’s bureaucrats hope their counterparts in
China, India, and the US will embrace carbon regulation next year in
Copenhagen.
The bureaucrats that run the European Union’s day-to-day business
aren’t known for taking risks. Yet back in 2005, when they devised the
EU Greenhouse Gas Emission Trading Scheme (EU ETS), these pencil
pushers gambled that a cap-and-trade scheme would help cut the EU’s
carbon dioxide emissions. Now, three years on, the environmental
benefits from the EU ETS remain unclear: The continent’s CO2 output
actually rose 1.1 percent last year. …
The continent has banked its financial future—and moral authority—on
creating a low-carbon economy. This gamble’s efficacy now depends on
the likes of China, India, and the U.S. deciding whether to embrace
carbon trading. “Copenhagen will play a big part in showing that
Europe’s creation of a cap-and-trade carbon market will pay off,” says
Mark Spelman, global head of strategy at consultancy Accenture (ACN).
If, however, a global agreement for CO2 isn’t reached, many
energy-intensive industries reckon their European businesses will be
the only one to shoulder the higher costs needed to cut emissions. The
extra financial burden eventually could send European jobs overseas and
increase costs there.
That’s exactly what could happen here, as well. Assuming we
implement a cap-and-trade system of any sort that burdens American
businesses, those that have the ability to shift jobs overseas will do
so, and the rest will fail in competition. This hurts small businesses
the most, which have the least flexibility to outsource manufacturing
operations, which will bear the brunt of any carbon capping system.
The same issue sunk Kyoto. Bill Clinton signed the treaty, but the
Senate unanimously passed a resolution rejecting it, specifically
because it did not bind China, India, and other developing nations to
the same kinds of limitations. Ten years later, cap-and-trade still is
exclusively Western, and the same economic risks remain.
Europe can’t even point to success in its own cap-and-trade system
to entice the US or any of the developing nations. They’ve tried to
cook the numbers by jiggering the baseline calculations for their metrics, but the truth is that carbon outputs have increased under the European system. Meanwhile, the US has cut emissions by 1.3% during the same period without a cap-and-trade system.
The EU hopes that the US doesn’t notice its failure, and that we use
our clout to bring in a few more saps. At this point, the only thing
that can save Europe’s business class is the hope that everyone else is
too stupid to realize that they’re being conned.