Common Tragedies

Thoughts on Environmental Economics

The Economist weighs in on green protectionism and Reggie

Posted by Rich Sweeney on November 17, 2007

Here’s the first link. Unsurprisingly the magazine opposes any sort of green trade restriction. As I said earlier on this page, I’m pretty skeptical as well. My opposition was further solidified by all the anti-free trade rhetoric at this week’s Democratic debate. Not sure what happened to the Democrats over the past 7 years, but it sounded like most of the candidates on stage in Nevada would gladly levy us back to the Hawley-Smoot days. No need to give them more ammo on this front.

Also in this week’s Economist is a short piece on the Regional Greenhouse Gas Initiative (RGGI). The main point is that RGGI is going auction all its permits (good), but that there may be too many of them (bad). On the former point, I actually don’t know if this is settled in all ten states. On the latter, this is something PointCarbon published two months ago. Given that electricity usage is so dependent on the weather and emissions are so dependent on fuel prices, pegging reduction targets to a baseline year will always lead to some over- or under- allocation. Yet banking should mitigate the damage of this over time. Of course none of this would even matter if Congress ever got around to passing a reasonable climate bill. RGGI’s initial cap isn’t that strict, so a more ambitious national policy would probably prove binding, and the price of RGGI permits would go to zero.

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