Cap-and-trade was the free market mechanism that was going to save the planet. Forgive me for being skeptical, but the terms “free market” and “save the planet” rarely fit together comfortably. One of the biggest issues, as Mark Schapiro of the Center for Investigative Reporting explains in his piece in Harper’s this month, is regulation. Who exactly is going to be regulating these polluters? And how can we be sure they’re actually doing their job and not falling asleep at the wheel the way the rating agencies that were supposed to be keeping Wall Street in check did?
Schapiro talked about some of the problems with the burgeoning cap-and-trade market in this interview from American Public Media’s Marketplace:
Ryssdal: The cap and trade regime has two purposes. One is actually functioning as a market. The other side of the coin, though, is the questionable part. Whether or not it actually does really reduce carbon emissions.
SCHAPIRO: Yes, let me give you an example. If a major German utility, which monitors the emissions at every one of their utilities all around Germany, and every month that company knows exactly how much over their emission cap they’re going; and so whenever they reach that cap they know they have to go buy five million tons, 10 million tons, 50 million tons, 100 million tons of these things called credits.
Ryssdal: And when they need those credits they go to Brazil or some other developing economy where some entrepreneur has set up a system whereby he can promise reductions in emissions, yes?
SCHAPIRO: Yes, so that utility can then look to a developing country like Brazil, or China, or India to find a project where a developer is saying all right, I would have been emitting X amount of methane, for example. But I’m going to put in a little machine that’s going to capture the methane from the landfill and therefore I’m going to reduce my emissions by X percent.