Buried in Pope Francis’s recent 184-page papal encyclical, “Laudato Si’,” on the many issues entangled in environmental and climate change concerns was an interesting swipe at cap-and-trade systems.
To recap, earlier this month Pope Francis issued a position paper that The New York Times describes as “sweeping in ambition and scope” that focuses on the “relentless exploitation and destruction of the environment” caused by “apathy, the reckless pursuit of profits, excessive faith in technology and political shortsightedness.”
In the masterful encyclical, the Pope calls does not endorse halfway measures but urges the world to overhaul political and economic systems with an eye those who are least able to duck the horrors of greed, excess and pollution caused by fossil fuels.
In Chapter Five as part of the Lines of Approach and Action section, part 171, the Pope says: “The strategy of buying and selling ‘carbon credits’ can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide. This system seems to provide a quick and easy solution under the guise of a certain commitment to the environment, but in no way does it allow for the radical change which present circumstances require. Rather, it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors.”
In another section, the Pope argues that strategies for “lowering pollutant gas emissions call for the internationalization of environmental costs, which would risk imposing on countries with fewer resources burdensome commitments to reducing emissions comparable to those of the more industrialized countries.”
This would harm developing countries and the poor would “end up paying the price,” according to the Pope. “As the bishops of Bolivia have stated, ‘the countries which have benefited from a high degree of industrialization, at the cost of enormous emissions of greenhouse gases, have a greater responsibility for providing a solution to the problems they have caused.’ ”
The Pope does suggest an alternative. “Taking advantage of abundant solar energy will require the establishment of mechanisms and subsidies which allow developing countries access to technology transfer, technical assistance and financial resources, but in a way which respects their concrete situations … The costs of this would be low, compared to the risks of climate change. In any event, these are primarily ethical decisions, rooted in solidarity between all peoples,” according to the encyclical.
I do not want to disagree with the Pope on this issue but I would like to point out that there are signs that cap-and-trade might work.
In the U.S., the Regional Greenhouse Gas Initiative (RGGI), a market-based regulatory program to cut greenhouse gas emissions is a cooperative effort among Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. RGGI has been quietly forging ahead with CO2 allowances sold via 28 auctions. RGGI officials say the proceeds from auctions can be “reinvested in programs that benefit energy consumers in the RGGI states,” according to Katie Dykes, deputy commissioner for energy of the Connecticut Department of Energy and Environmental Protection, and chair of the RGGI, Inc. board of directors. “Past investments of RGGI auction proceeds have saved consumers money on their electric bills while reducing harmful pollution and encouraging clean energy innovation,” Dykes says in a prepared statement.
On the West Coast, California’s Cap-and-Trade Program, under the auspices of the Air Resources Board, could as much as $3.9 billion that the state is putting toward a variety of initiatives, including the Affordable Housing and Sustainable Communities program, which supports transit projects such as a high-speed rail system. There has been further speculation that the fees from cap-and-trade could support trucks that run on natural gas and new ferry systems. The concept behind the affordable housing push is that more low- to no-carbon transit, biking and walking options should be made available to residents especially those in disadvantaged neighborhoods.
It may be that the Pope is correct and that far more radical solutions are required to halt the pollution causing climate change. Some have even argued for a tough carbon tax. However, if a “mild” cap-and-trade system, embraced by all of the world’s financial markets, is facing political obstacles then far more dramatic steps are not likely to be viable.
However, given the success of RGGI and California’s system, I think that the answer is in giving cap-and-trade systems a real chance to succeed.
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