Cap and Trade

It was only today that I finally really grasped just how dismal an idea the cap and trade, emissions trading, approach to carbon emissions control is. It isn't just that the particular EU scheme constitutes a subsidy of half a billion a year from British organisations to the rest of the EU; there is a more fundamental problem. It was when I saw this Excel file that I really 'got it'. That's every hydrocarbon user in the European Union Emissions Trading Scheme and their Annual Allocation of emissions from DEFRA under Phase I. The supposed market solution relies upon bureaucrats coming up with a quota for every plant in the country based on their emissions history and an estimate of how much they can cut.

It's reminiscent of some old Communist five year plan with government telling the private sector what it is capable of and should achieve, why is this considered the capitalist approach?

It relies upon the state being able to properly assess the technological possibilities in a host of industries, both in the present and the future. It is chronically vulnerable to manipulation by skillful or 'generous' businesses that can influence the decision over their quota. The trading system represents a huge great transaction cost for the public sector as NHS Trusts and the like who have no idea how to trade a commodity like an emissions permit make a mess of things. The skilled traders at Shell and BP, by contrast, have made a profit from the Emissions Trading Scheme.

In short: a hideous idea.