Europe’s Uneven Experience with ‘Cap and Trade’

By April 9, 2007General

Interesting article on the front page of today’s WaPo by Steven Mufson, chronicling Europe’s uneven experience with its “cap and trade” system for carbon emissions. He profiles one Dutch company, a maker of industrial abrasives, that has seen its costs soar as a result of these rules. The cap and trade system, reports Mufson, “has driven electricity prices so high that the facility routinely shuts down for part of the day to save money on power.”

“Although demand for its products is strong,” Mufson goes on to report, “the plant has laid off 40 of its 130 employees and trimmed production. Two customers have turned to cheaper imports from China, which is not covered by Europe’s costly regulations.”

Right. We knew that.

He quotes an aide to German Chancellor Merkel as saying that higher electricity prices are, “The intent of the whole exercise,” adding, “If there were no effects, why should you have a cap-and-trade system?” This person is a bureaucrat, of course, making rules and regulations, not jobs.

Finally, there is a quote from an energy policy group noting that “legislation to mitigate climate change is going to have significant economic costs was ell.” Yeah, we get that, too, which is why our policy is to first, make damned sure we’re right on the science and not to go around testing out new theories, and second to first do no harm to the economy by trotting out pseudo-solutions that will kill the economy. On the latter point, this isn’t theory, as we only have to gaze across the pond to see the effect that some of this social engineering has had on Europe. Do we really want to go down the same path?

Oh, by the way, it’s all carbon all the time in the WaPo today, including an op-ed from former Garden State Governor Christie Whitman and one by Fareed Zakaria. Zakaria correctly gets that the cap and trade system ain’t working great in Europe, but goes on to advocated a carbon tax. What effect do you suppose a tax will have on America’s manufacturers in their efforts to compete against China?

Back to the drawing board, we say.