The venerable British bank, Barclay’s, founded four centuries ago right at the end of the reign of Queen Elizabeth I, and NRG Energy Inc, the largest US independent power producer, have just completed a deal for the very first carbon permits to be offered by California’s planned cap and trade program to reduce pollution in its AB32 climate legislation, according to Bloomberg News.
The permits will be delivered in December 2012, according to the head of US emissions trading at Barclays in the UK, which has been involved in (EU) carbon trading for some time. The trading begins in 2012 for utilities and manufacturers, and by 2015, for vehicles.
(Tesla has already benefited from carbon trading, receiving $13 million from Honda in carbon trades, since electric vehicles reduce greenhouse gases. Honda has been one of the last of the major car manufacturers to move to develop electric vehicles, so by 2015, it may still need permits to produce gas cars.)
The first permits are offered at $11.50 a ton, but by 2020, could reach as high as $30 a ton. Market conditions can only determine the price to pollute, so the cost (to polluters) and the benefit (to innovators) can vary. By contrast, pollution limits are fixed. They cannot be exceeded.
The advantage of cap and trade over carbon taxes is certainty. Pollution is capped and reduced.
The cap: a total pollution allowance, is set in advance and reduced each year, in order to meet greenhouse gas reduction targets.
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Wouldn’t it be wonderful if we could have another four centuries of civilization?
If widely adopted, cap and trade would make this possible, by simply capping and reducing the dangerous greenhouse gases that foreclose our future. Queen Elizabeth’s legislative heritage, and the longevity of Barclay’s Bank shows us that good legislation like AB32 builds real civilizations that last.