A couple of years ago I suggested to Frank Felder, Director of Rutgers’ Center for Energy, Environmental, and Economic Policy (CEEEP), that we co-sponsor a debate on the relative merits of cap-and-trade vs. a carbon tax. The idea went nowhere, because the conventional wisdom, then as now, is that anything with the word “tax” in it is a political nonstarter.
I thought this was shortsighted then, and think it is still short-sighted now. If we fail to discuss what may be better alternatives because they are not politically popular, they will never get the chance to become widely considered, and we will have allowed a self-fulfilling prophecy to dictate our fate. Political acceptability is an important factor in choosing a course of action. But it is not the only one. If a carbon tax (or, as some prefer to call it, a “fee”) is a better approach, then we need to figure out how to make it palatable. And if cap-and-trade will, as others claim, do more harm than good, then we need to consider how to de-legitimize it. Continue reading “Will Cap and Trade Work?”