Tuesday, 22 September 2009

Emissions trading

It seems some government bodies have venerated market forces to the point of assuming they will solve all problems. That's why they suggest emissions trading schemes. The idea is to commit to a certain amount of pollution (hopefully lower than the current situation), break that amount up into many credits and sell those credits as discrete licenses to pollute that much. To lower emissions targets further, the government would have to buy back credits and nullify them.

Sounds good to an economist, but there are problems. The most obvious problem is that the richest companies are the ones who will buy the most credits, but they're also the ones who can afford to change. Smaller companies then need to adapt or die without the emissions trading option ever really reaching them.

In all, we have to remember the law of unintended consequences: whatever you are trying to achieve, you will always end up with more unintended side-effects than your intended results.

Mokalus of Borg

PS - In general, I don't think it's such a great idea.
PPS - In particular, I think it will cause some unforseen problems.

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