Creator of Cap-and-Trade Scheme Says It Is Not the Answer to Climate Change

Thomas Crocker, a founding father of the cap-and-trade system, recently told The Wall Street Journal that he's skeptical that a cap-and-trade approach is the best way to regulate carbon emissions.

Crocker, who first envisioned cap-and-trade as a University of Wisconsin graduate student in the 1960s, said that carbon emissions are a global problem with myriad sources and cap-and-trade is better suited for discrete, local pollution problems. "It is not clear to me how you would enforce a permit system internationally," said Crocker. "There are no institutions right now that have that power."
 
China, India and other developing markets have shown no interest in capping their emissions, fearing limits would curb their growth. If they don't participate, there is little assurance that global carbon emissions will slow much even if the U.S. goes forward with its own plan.
 
The other problem, Crocker explained to The Journal, is that quantifying the economic damage of climate change -- from floods to failing crops -- is by no means an exact science. One estimate puts it at anywhere between 5 percent and 20 percent of global gross domestic product. Without knowing how costly climate change is, nobody knows how tight a grip to put on emissions, said The Journal.
 
Crocker said cap-and-trade is better suited for problems where the damages are clear -- like acid rain in the 1990s -- and a hard limit is needed quickly.
 
"Once a cap is in place," he warned, "it is very difficult to adjust." For example, buyers of emissions permits would see their value reduced if the government decided in the future to loosen the caps.
 
In lieu of cap-and-trade, Crocker told The Journal that he now prefers "an outright tax on emissions because it would be easier to enforce and provide needed flexibility to deal with the problem."

Crocker's unexpected opposition to cap-and-trade is just one reason it should be stripped for any energy bill or climate change bill.

Critics of cap-and-trade explain that the legislation will also:

• Reduce America's real GDP by $400 billion each year--a cumulative loss of $9.4 trillion by 2035
• Increase the cost of natural gas 56 percent, electricity 44 percent and motor fuel 19 percent by 2025
• Likely produce both inflation and unemployment, returning us to the stagflation of the 1970s
• Threatens more than 2.5 million jobs