Why Pennies Per Pound Better Than Cap & Trade

Why Pennies Per Pound is better than previous Cap & Trade ideas?

Pennies Per Pound is simple and therefore significantly easier for people and business to understand and predict.  Pennies Per Pound would apply to everyone, not just major polluters, so everyone would be invested in saving energy and money.

stack of penniesCap & Trade is a complicated system which might make sense to someone with a PhD in Economics, but for the rest of us is extremely complicated and hard to predict what it will mean to our expenses now and in the future. The WikiPedia entry for Emissions Trading has a good explanation of what it is and how it works, but it takes pages and pages to explain. Here is a brief excerpt:

A central authority (usually a governmental body) sets a limit or cap on the amount of a pollutant that can be emitted. The limit or cap is allocated or sold to firms in the form of emissions permits which represent the right to emit or discharge a specific volume of the specified pollutant. Firms are required to hold a number of permits (or carbon credits) equivalent to their emissions. The total number of permits cannot exceed the cap, limiting total emissions to that level. Firms that need to increase their emission permits must buy permits from those who require fewer permits.[1]
The transfer of permits is referred to as a trade. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions. Thus, in theory, those who can reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest cost to society.

On the other hand, Pennies Per Pound is easy to understand and easy to predict.  Under Pennies Per Pound business and individuals will be able to project what the future impact of the straight forward energy tax will be.  Also, it empowers business and individuals to make choices today to save energy and money in the future.  The tax based on carbon emissions, instead of some complicated formula subject to pressure from lobbyists, will encourage power generators to move towards lower emissions of carbon without the government trying to pick which solutions or technologies are best. 

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