Carbon Allowances

I have always held some antagonism for a policy of Cap and Trade of CO2 emissions. The CBO Report (PDF) has placed some identification of my ill will. It becomes apparent that the real cost of the program will be borne by Consumers, and in a relatively regressive manner ( the Cost is borne by All, but upper-Incomes have to pay a smaller percentage of their Income); this effect impossible of cancellation in this Market-based strategy. Producers will suffer only Transition Costs, as they immediately pass the Costs onto Consumers adjusted for the increased per unit Profit charged; they effectively only holding a mortgage on Consumers’ purchase of their Product. Their holdings of Product is not reduced, with only the amortization of the value being extended at high Profit return. Eventual utilization of the Carbon Product can be achieved at less hectic rate, where they can cancel heavy Capitalization needs and Overtime Costs. Workers, and Consumers, will find themselves Downsized with lower Wages and higher Prices.

The selling of Carbon Allowances will only allow for higher Profit ratios for Producers, as they switch their Costs from Equipment to the artificial Paper instruments of Carbon Allowances; a form with much higher Resale value and wider Market. The giving away of Carbon Allowances frees Producers from the need of any Capitalization at all, while they are still allowed to pass the Cost of the Carbon Allowances plus added Profits onto the Consumers immediately through restricted Supply in a heavy Demand market. This very much sounds like a Bush Corporate policy. lgl