Thursday, July 2, 2009

Moving Toward a Greener Economy

On July 1, the Washington Post published the following letter to the editor by Greg Ebel, President and CEO of Spectra Energy Corp., which operates natural gas pipelines and gas processing, storage and distribution facilities.
The June 26 editorial "Waxman-Markey" was right to push policymakers toward a better alternative to cap-and-trade emissions policy for addressing climate change. A straightforward, predictable carbon tax would present less room for manipulation while encouraging carbon emissions reductions.

The best carbon tax would be revenue-neutral, attaching a penalty to what we want less of (carbon emissions) while encouraging what we want more of (jobs, technological innovation and efficiency). Such a fee would directly and visibly assess the true costs associated with emissions and drive behavioral change quickly.

A tax doesn't create artificial scarcity, monopolies or rents. Without the profit potential of amassing tradeable carbon permits, industries would less incentive to try to get credits for their favored but non-competitive energy sources. That would be the likely result of the cap-and-trade bill moving through Congress.

What's more, a cap-and-trade system can be gamed. The financial derivatives associated with emissions credits would be traded in a new, hugely complex, multitrillion-dollar carbon market. Instead of turning our environment over to the traders who brought the financial system to its knees, we'd be wise to develop a far simpler system for addressing carbon emissions."