Cap & Trade is the Wrong Policy to Curb Greenhouse Gases for the United States
by Dr. Michael E. Canes
July 20, 2007
The Marshall Institute released its new study, Cap & Trade is the Wrong Policy to Curb Greenhouse Gases for the United States, authored by Dr. Michael Canes. Dr. Canes analyzes the burdens of implementing a Cap and Trade (C&T) system and concludes that strengthening a goals-based approach presents a more attractive policy option.
U.S. policy for controlling greenhouse gases (GHG) has relied largely on voluntary actions to achieve its objectives. Through 2006, the U.S. is ahead of schedule, having reduced the GHG intensity of its output over the past four years by almost 11%. But a number of C&T proposals have emerged to compel more rapid reductions in GHGs.
Dr. Canes argues that implementation of a GHG Cap and Trade system in the U.S. would be a serious policy mistake: it would impose high costs on the economy; result in volatile prices for allowances and fossil fuels; involve government creation of wealth, creating vast opportunities for "rent-seeking," influence peddling and corruption; and require extensive and expensive worldwide monitoring.
Dr. Michael E. Canes is a Senior Research Fellow at the Logistics Management Institute in McLean, Virginia. He previously was Vice President and Chief Economist of the American Petroleum Institute, where he sponsored early development of the Charles River Associates Multi-Sector Multi-Region Trade (MS-MRT) model for climate change policy analysis. Dr. Canes has a PhD in Economics from UCLA and an MSc in Economics from the London School of Economics.
Dr. Canes' Powerpoint Slides for this event can be found at http://www.marshall.org/pdf/materials/535.pdf