Via Andrew Sullivan, I learn that James Hansen is boycotting the talks in Copenhagen on the grounds that he objects to cap and trade. But what is his objection?
“The fundamental problem is that fossil fuels are the cheapest form of energy. As long as they are, they are going to be used,” he said.
He said that it would be better for the summit to fail rather than reach the type of cap and trade-based system envisaged.
We are going to have to move beyond fossil fuels at some point. Why continue to stretch it out longer?” he said. “The only way we can do that is by putting a price on carbon emissions. The business community and the public need to understand that there will be a gradually increasing price on carbon emissions.”
He proposes that the “carbon tax” start at the equivalent of about $1 per gallon of petrol but rise in future years.
Okay, I’m stumped.
Hansen is a really smart dude. So surely he must know that cap and trade does put a price on carbon emissions. I mean, everyone agrees about this, right?
There are legitimate reasons why some folks prefer taxes to cap-and-trade systems (though I’m a c&t guy, myself). But I thought everyone on both sides of the debate acknowledges that the two programs are fundamentally similar with respect to creating a price signal—they just aproach the problem differently.
In brief: A carbon tax prices carbon directly and relies on higher prices to reduce demand. Cap and trade restricts the supply of carbon thereby creating a price that fluctuates in response to demand. Does anyone disagree with this basic assessment?
Someone please enlighten me in comments. I don’t want to get into a big debate about all the respective merits and demerits of the two systems. I just want to know: does anyone out there think that cap and trade does not put a price on carbon?
In other words, what does Hansen mean?