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12.21.2004

Kyoto Protocol Discussions

In two well-written posts economists Gary Becker and Richard Posner discuss global warming and the Kyoto agreement.

Posner takes the position that the Kyoto Protocol is flawed, but a step in the right direction. He maintains that by imposing stiff taxes on CO2 emissions we can control the increase in greenhouse gases in the atmosphere. He believes that this tax would create the incentive for companies to reduce emissions and create technology to trap, filter, and generally reduce CO2 output. While I agree that this method is better than government R&D subsidies, I think it is flawed.

I agree with Becker, who urges the creation of a marketable quota system. Quotas for individual companies would be able to be bought and sold on an open market -- similar to the Chicago Climate Exchange which currently trades sulfur dioxide emission rights. Taking a market-based approach to limiting emission would increase the efficiency of resource allocation and at the same time encourage the development of technological solutions to reduce levels of CO2 emitted. Becker also maintains that the Kyoto Protocol in its current form is too flawed for the US to sign it, and I agree. The net effect of the treaty would be to disproportionately restrict developed nations while developing nations like China, Brazil, and India as well as oil producing countries like Saudi Arabia are exempt.

The negative effects of imposing the Kyoto Protocol on American industry would be very, very bad. The Left spent the entire election year lamenting the loss of manufacturing jobs in the Midwest, yet they desperately want us to impose restrictions that would hasten the decline. Very forward thinking, huh?

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