by Luke Holoubek

Created on: June 15, 2009   Last Updated: June 29, 2009

Although touted as a market-based solution to the problem of global warming, the cap and trade solution is not only ineffective, but excessively and unnecessarily burdensome for all levels of consumers and industry.

Although instituted to supposedly reduce greenhouse gas emissions and consequently reduce global warming, the indirect and unintended consequences of such a system are potentially disastrous. First, the cap and trade system will place on producers in almost any industry an additional financial burden. As domestic industries continue to compete internationally, these increased costs will immediately be passed on consumers. This will hit energy consumers particularly hard.

As most of our energy currently is produced from coal (a target for environmental regulation), the costs of energy will increase substantially (some estimates as high as 75%). While this increase seems negligible and and an easy price to pay for wealthy individuals, in will undoubtedly be nothing more than a tax on working and lower class families who spend a much higher percentage of their income on basic needs.

The nature of the allowances provided in the cap and trade system are also alarming. The government will be given complete oversight of the program, allowing well connected regulators to assign allowances to industries and polluters. This provides a further incentive for "dirty" industries to increase political contributions and lobbying in order to gain the maximum allowances possible, reducing the amount of "carbon credits" they would have to buy.

This unfortunate and unintended problem has manifested itself in the European cap and trade system, whose results have been abysmal at best. Some simple research can provide examples of the absolute failure of the European system thus far (although it has been extremely successful at raising prices).

The effect of such a system on the actual reduction of pollution is also notably poor. Even by favorable estimates, the long term reductions caused by such a system are hardly significant. This problem is amplified by the fact that many other industrial economies, such as India, China, and Brazil, have routinely denied the need to burden their economies with such restrictions. Without international cooperation, the goal of reducing greenhouse gases is unrealistic.

While the motivation behind cap and trade might be noble enough, the system is destined for failure. Hopefully, through education and careful analysis, our politicians can stand resolutely against such a harmful policy. Despite popular belief, the science behind "climate change" is hardly conclusive, and the lifestyle of Americans already struggling with our current crisis should not be compromised to fulfill an environmental fantasy.

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