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Yale Environment 360: The Flawed Logic of The Cap-and-Trade Debate

Authors: Ted Nordhaus, and Michael Shellenberger
May 19, 2009


Two prominent--and iconoclastic--environmentalists argue that current efforts to tax or cap carbon emissions are doomed to fail and that the answer lies, not in making dirty energy expensive but, in making clean energy cheap.

In early May, anxiety among climate activists about the fate of cap-and-trade legislation erupted into a full-throated roar with the release of a scathing open letter by Dr. James Hansen. In it, the NASA scientist called a bill by Representatives Henry Waxman and Ed Markey a "temple of doom," savaging it for being complex, corrupt, and "a minor tweak to business-as-usual." Hansen called for a carbon tax in its place, one that would establish a "substantial and rising price on carbon emissions."

Hansen was right about Waxman-Markey. It will do little to reduce U.S. emissions, will transfer billions to incumbent energy interests in the form of free pollution permits, and will send billions more to timber, agriculture, and other interests, here and abroad, in the form of dubious "offsets." But Hansen's analysis of why climate legislation has gone so terribly off the rails is wrong.

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