Wednesday, December 9, 2009

Cap and Trade Implementation Shenanigans

I’ve mentioned before that the problem with both cap-and-trade and carbon taxes incentivize companies to shift production to countries that don’t impose carbon costs, and that it’s going to be a difficult problem to avoid.

Cap-and-trade as implemented in Europe (and possibly in America as well) has the ugly distinction of actually paying people to cut carbon, leading to outcomes like these:
A steel company is closing an efficient steel plant to get money for the carbon, and shifting production to India. This is of no benefit to the environment, but a substantial cost to Britain and the EU in jobs and transfer payments to steel companies.

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