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Comment by gwd | Hacker News Reader

The idea I've seen with the "cap and trade" is that you use the money to, say, help a factory in a developing country install more expensive, less carbon-emitting equipment -- equipment which may not have been economical for them to do without the subsidy. That helps reduce emissions for the lifetime of that factory, as well as encouraging the development of lower-carbon technology overall.

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Notably this article is about offsets, not cap and trade.

Cap and trade is fundamentally different from offsets in that there is a central authority who decides precisely what caps every company gets before trading starts, so every transaction which increases one company's cap by 1 ton is guaranteed to decrease another's.

Offsets are a decentralized attempt to quantify how various actions would lower the world's carbon output compared to some estimate of what would happen otherwise. The cheapest offsets prey on this ambiguity in the various ways the article suggestions.

The other big difference is that cap and trade is mandatory while offsets are optional. There is so little offset-buying happening now that the markets are artificially cheap. Companies currently claiming to be "carbon neutral" would certainly be unable to afford doing so if it was required of every company (similar to if the "cap" was universally zero carbon, a clear non-starter today).

The problem with cap and trade is that governments hand out free certificates to favorite industries which completely undermines the program. They are also reluctant to reduce the amount of certificates fast enough to actually bite. Then there is the problem of all the exempt sectors.

Yes the idea is perfectly sensible, the issue is that such schemes are probably a practical impossibility for humans to implement and police in a such a way that we achieve the goals or reducing co2 output, rather than just achieving a way for people to game the system for profit.

Even if everyone involved operated with good faith, even accounting accurately for the co2 externalities accurately is very difficult, and you can be sure a huge percentage of people will not be acting in good faith.

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