Cap and Tirade

Commentary, Climate, Frontier Centre

One may accuse the Harper government of many things, but the notion that rejecting cap and trade in favour of regulation of carbon emissions makes them “Communists” — as suggested in a piece by Dan Gardner in the Post on Monday — seems a little over the top. Mr. Gardner asserts that since he cannot “read minds” he must assume that Environment Minister Peter Kent really means it when he says that “Climate Change is one of the most serious environmental issues facing the world today.” Thus the government must be sincere about addressing it. Instead, claims Mr. Gardner, their proposals to deal with the problem by regulation represent a level of economic ignorance unseen outside the University of Havana!

If we can pry him off the ceiling for a second, I would humbly suggest that Mr. Gardner open his mind to a little political “mind reading,” plus perhaps take a refresher course in economics.

The Harper government’s “official position” on climate change seems to be dictated by a combination of its minority status, the requirement to head off possible climate trade sanctions — particularly from the U.S. — and perhaps even an unwillingness to take the lead in pointing out that the global warming policy emperor has no clothes.

As for the economics, Mr. Gardner claims that “pricing” carbon via cap-and-trade is “efficient because it isn’t some bureaucrat in Ottawa who decides who will reduce emissions and how they will do it.” Has he been vacationing off planet? The “cap and trade” approach to curbing carbon emissions has always been promoted as a “market based” solution, but I had never come across anybody before Mr. Gardner who dared to suggest that it was a “free market” solution. In fact, cap and trade is to free markets what Sophie’s Choice was to free choice. It corresponds to the Stalinist definition of initiative: finding the best way to carry out an order.

The theory is wonderfully plausible. Those companies that can cut emissions cheaply sell “credits” to those who find it more costly to do so. Technological initiative is unleashed. The market rules. Not. Cap and trade’s “market” is entirely artificial, based on government-created scarcity. It isn’t a market in freely traded goods, but in bureaucratically regulated “bads.” To be “effective,” that is, slash carbon emissions on a scale that would alter the climate (itself a ridiculous pretension), it would have to involve caps on the entire world’s industrial production (mainly that of China). This implies a vast global bureaucracy, likely based in the terminally incompetent and corrupt United Nations. At whatever level of regulation, however, cap and trade promotes the sleaziest of mixed-economic concoctions, supported by officials who would do the capping, and the private-sector operatives who would do the trading, and/or reap the benefits of a system that is doomed to be rigged.

In the U.S., Enron was a huge fan of cap-and-trade. Other big companies, such as those in the Climate Action Partnership, realized that they might cash in simply from building new plants that were invariably more energy efficient, or from erecting “renewable” facilities that would find bureaucratic favour.