Carbon Credits in California

So it begins. California is now on its way to carbon trading. The first wave is to hit in November for Industries here in California. Only 10 percent of the credits will be auctioned in the first year and by 2020 50 percent will be auctioned.

I have never been an advocate of the carbon credit/carbon trading. Touted as a simple Pigovian Tax (like any Pigovian tax is simple) It’s aim is to reduce carbon emissions. The idea is to put a limit on carbon and then have the market trade these credits around.

While I would agree that the reduction of carbon is a goal that must be pursued. We need to do better on a Global National and Individual level. I will not get into arguments about global warming and its causes. Nor will I comment on Kyoto or Copenhagen. I will simply point out that pollution is pollution and we need to mitigate this problem to the best of our abilities.

The truth is this is simply an energy tax. There is no plan to use the monies collected to research and development of carbon reduction.  The money will simply go into the hands of traders and in to the coffers of a government. As it is not taking care of externalities it cannot be considered a Pigovian Tax.

I do not like a hidden tax that everyone pays for a few understand. Put it up front for us to examine in society. Call it a tax and provide a clear path of who is paying and how much. Document where this tax money will flow, which should be for and only for carbon reduction. Plant some trees, install some carbon banks, nurture a plankton bloom, install solar water heaters with the tax money.

Call it what it is, labeling a tax as a credit is insulting.