Capping and Trading in Minnesota

The Star Tribune has a story about how our state legislature likes the idea of a regional cap-and-trade system.

I fully endorse the idea. If you’re unfamiliar with how it all works, the Twin Cities Daily Planet has a good primer:

Cap and trade systems are appealing for two main reasons. First, unlike traditional regulatory schemes, they are market-based. Cap and trade systems allow economic forces to dictate where emissions cuts will occur, rather than relying on government mandates. The U.S. has had a cap and trade system to deal with acid rain-causing pollutants since the 1980s, and has achieved deep reductions at far lower costs than had been anticipated. Second, cap and trade is more palatable politically than a direct carbon tax, which would have roughly the same effect.

Arguments against such a system (and global warming in general) are in the comments of the Strib article. Here’s one that raises a relevant point:

Does anyone think that the cost of purchasing the carbon credits won’t be passed along in the form of higher prices and then the carbon producing entities shifted to India or China which already have signnificant cost advantages? This is the dumbest idea to come down the pike in a long time. All in the name of eliminating a problem that doesn’t exist.

This is a fair question. Slave labor, child labor, cheap labor, all of it was outlawed in the United States and then moved elsewhere. While a cap and trade system will have the intended local outcome (due to the free market and a craving in the business community for clear regulation—if regulation is necessary—as opposed to governmental hemming and hawing, which is when businesses pick up and leave), there is a fear it will simply shift the problem out of sight.

And I’m not going to say some pollution won’t go overseas. But in most cases, if they’re not already making it overseas, they’re not likely to start. It’s generally cheaper for a company to produce close to the raw materials and end users, both of which are generally in the United States, if not the Midwest specifically. Add to that the cost of scouting new locations overseas, buying land, building new facilities, and all the other work that goes into off-shoring, and compare that with the relatively easy task of retrofitting current facilities. The off-shoring argument falls flat, I think.

So, while I disagree with our Republican governor and our DLF legislature on many issues, I’m glad they’re moving forward with this system. I really do think the clear regulations will attract business (and obviously our pro-business governor must as well), and we can add green jobs and green living to the long list of what makes our state so wonderful.

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