tag:blogger.com,1999:blog-4900303239154048192.post2200316822247715245..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: On Cap & Trade and the Price of EmissionsUnknownnoreply@blogger.comBlogger2125tag:blogger.com,1999:blog-4900303239154048192.post-48009510898150600942014-02-21T12:24:51.418-05:002014-02-21T12:24:51.418-05:00There is another important difference between cap ...There is another important difference between cap and trade and emissions taxes that ends up being crucially important but not well appreciated. I witnessed it first hand being a solar developer in New Jersey, where the state has implemented a cap and trade policy (kind of in reverse, the SREC program) to support solar development. It has been successful, but has cost taxpayers (well ratepayers technically) more than it probably should have. The problem is, putting up solar is capital intensive and pays back the investment over many years. The price of the SRECs in the future is not known, so capital investment requires a higher price for those SRECs to compensate for the risk that the price will decline in the future. <br /><br />The net effect is a transfer of wealth from taxpayer to financier, because the amount of solar that gets built is prescribed. But the public ends up believing that it costs more to put up solar than it actually does cost.Anonymoushttps://www.blogger.com/profile/07997581411308083927noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-14233646985716332292014-02-21T10:37:43.358-05:002014-02-21T10:37:43.358-05:00Cap and trade cannot stand for a low demand shock;...Cap and trade cannot stand for a low demand shock; while as you pointed out fee and dividend cannot stand for a high demand shock. So we urgently need a policy responding to the future uncertain demand, right? Carbon tax seems to be one of the answers; but what about a cap as a function of changing demands? Anonymoushttps://www.blogger.com/profile/08368847182934994518noreply@blogger.com