Forget Carbon Taxes and Cap-and-Trade – They Don’t and Won’t Work

Those solutions assume time to slowly decrease carbon output and honesty on the part of government and corporations. Time is too short and honesty virtually non-existent. They also leave out the other greenhouse gases, especially methane. We need to completely transform the economy starting immediately and achieve GHG neutrality within years, not decades. And why are we allowing people to pollute anyway?

People who think carbon taxes or cap-and-trade will work are assuming governments and corporations – these days there is little difference between the two – will do the right thing. Have they done so thus far?

The European Experience with Carbon Trading

Look at the European Union’s imposition of a carbon trading system; so far, carbon dioxide emissions by companies under the trading scheme continue to increase. Perhaps more slowly than they would have without the system, perhaps not; there is really no way to be sure. But we can say unequivocally that the E.U. carbon trading scheme has so far not done what it was intended to do, namely reduce emissions, while at the same time it has increased costs for consumers.

The theory of carbon trading is that companies have carbon credits (essentially a license to pollute) that they can sell if they don’t need them. Thus companies that dump less carbon sell their credits and companies that dump more have to buy credits. This is intended to provide motivation to emit less carbon. That’s the theory.

In the E.U., intense lobbying (formerly known as “corruption”) resulted in carbon credits being given to polluters for free, rather than sold, and so many of them were handed out that the carbon market all-but-collapsed. Accusations of undue corporate influence were and are denied by many of those responsible for handing out the credits. The value you should place on such denial is best illustrated by the case of the German economy minister of the time. He denies accusations of undue influence by industry –  and today sits on the board of RWE Power, Europe’s largest emitter of carbon.

Insanity: doing the same thing over and over again and expecting different results.
— Albert Einstein

If you expect a different result from a carbon trading system imposed in Canada or the United States, you’re crazy. Sorry, but you are. You’re expecting a different outcome from the same people and system who brought us the current mess. Do you really think the Canadian and American governments are less ‘influenced’ by big carbon emitters like Big Oil, King Coal, and the auto manufacturing industries than the E.U. governments were?

The sad fact is that large corporations will game the system in their favour, period.

What About Carbon Taxes?

At one time, I was in favour of carbon taxes. In theory, it’s the fastest way to send the correct signals to carbon emitters: Buy something made in a ‘dirty’ manner and you pay more. It’s also fair: the more you pollute, the more you pay. I even suggested that current sales taxes be replaced by a carbon tax.

Since then, however, I have become much more realistic. The same problem of corporate influence over government exists; corporations will finagle loopholes that defeat the purpose of the system. They did in Norway and they did in British Columbia, Canada, my home province. The result is that you and I pay carbon taxes, and big polluters get exemptions, tax breaks, subsidies, or some other special deal.

Theory versus Reality

In theory, cap-and-trade and carbon taxes will work. In the real world, they have not and will not. We must accept that our governments serve corporate interests first and foremost, and corporations do not want to pay taxes.

We can’t solve problems by using the same kind of thinking we used when we created them.
— Albert Einstein

The problem still remains, though. Greenhouses gases – not just carbon dioxide – continue to be dumped into the atmosphere. Pollution of many kinds, in fact, is still largely free. That is a big disadvantage to anyone trying to do the right thing; it is stalling the green economy.

How we will eliminate pollution in the face of corrupt governments and their corporate controllers is a mystery. I would say we will not, and it is dangerous, wishful thinking to pretend that we will.

In order to solve the climate crisis, we have to solve the democracy crisis.
– Al Gore

Yes, I just quoted Al Gore after two Einstein quotes. Gore is correct, but perhaps not in the way he thinks. We don’t have time to pass strict campaign finance and lobbying reform laws and then wait several terms for the turds to be flushed out of the system. It won’t happen anyway, because the majority of politicians in power and their corporate backers do not want it. At best, baby steps will be taken – and fought every step of the way – and we’ll never get there.

What Has Worked and What is Needed Now

When faced with a government corrupted by powerful interests, only two things have worked in history to fix that. One is violent revolution, and the other is mass, ongoing action. I prefer the latter; Martin Luther King Jr. and the U.S. civil rights movement showed how effective this can be. Candlelight vigils won’t do it. Economists and environmentalists need to accept that their theories are ignoring the reality on the ground. Incremental changes will be undermined by vested interests with more money and less morals than God.

The only way to clear the air of pollutants is to flat-out ban them. Give a phase-out period if need-be, but make it very short: 4 years at most. At the end of that time, any company still pumping out pollution has its corporate charter revoked. [Eliminating pollution does not mean wrecking the economy. That is propaganda put out by vested interests terrified their unsustainable business models will be challenged. I'll devote a future post to how we can - must - have a robust, clean-and-green economy with jobs for all. We retooled the economy in a few years to fight World War II; we can green it in four years.]

Sound extreme? Perhaps. The slogan for this site ain’t “The Voice of the Green Revolution” for nothing. But we cannot continue doing what we have been and expect different results. That is delusional. It is clearly not working. We are dealing with people who think they have a right to pollute and who will derail any action to stop that. I believe the evidence shows that they operate from a Predator Morality. They aren’t going to stop voluntarily, and our governments no longer have the power or any interest in doing so. It is up to us.

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Resources You May Find Useful

These books deal with green economy solutions. Natural Capitalism and The Climate Challenge are packed with working examples. Cradle to Cradle contains some interesting examples plus the background theory, and is printed on a special material that can be recycled into another book. The pages are washed and reprinted. Plan B 4.0 is by Lester Brown, one of the pre-eminent thinkers on solving the issues confronting us. It is also available as a free download (PDF).