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Your dad is president of EDF? Wow, you really never know who you'll find on Hacker News! BTW, that's a nice looking book that's now on my Wish List. I know fo

Your dad is president of EDF? Wow, you really never know who you'll find on Hacker News! BTW, that's a nice looking book that's now on my Wish List. I know for sure that cap-and-trade is better than tech requirements or per-company caps. I'm one of the biggest fans of environmental capitalism around (see http://www.pchristensen.com/blog/articles/worlds-best-primer-on-energy-competitiveness/ http://www.pchristensen.com/blog/articles/worlds-best-primer... and http://www.pchristensen.com/blog/articles/the-ecology-of-commerce-by-paul-hawken/ http://www.pchristensen.com/blog/articles/the-ecology-of-com...), but that still doesn't explain why cap-and-trade is better than a carbon tax. Is the concern that the tax will be too low and not result in an absolute reduction in emissions? Or that the revenue collected will be used inappropriately (ie not to offset the damage caused by the pollution)? That was more what I was looking for.

Alex3917 19y ago
Well I don't want to speak for him, but I think the general advantage of cap-and-trade is that it makes it profitable for entrepreneurs to innovate. When you give money to the government it basically gets stolen, whereas under cap-and-trade the money goes directly the entrepreneurs who come up with the solutions. The book is actually all about the policies that most help entrepreneurs. To quote from the introduction: "A level playing field. That is what these venture capitalists and innovators require-- not assurances of profits but enough of a fighting chance to make the huge risks they are taking reasonable. Many still will not succeed. Those who do will need enormous ingenuity and doggedness to make their inventions work at a marketable price." I think most news.yc readers would actually love the book.
- pchristensen 19y ago
  True, in practice if the carbon tax was used as a revenue source (or even revenue neutral - basically letting you cut taxes somewhere else), then the incentive would be to make it too low to be either a good pollution deterrent or an entrepreneurial incentive. Sort of like how the gas tax is in the US. In European countries (Japan too?), the gas tax is 10-20x as high was here and their auto and energy industries are very different because of that. If the carbon tax was high enough (possibly higher than the amount that would maximize taxes collected) and the collected money was used to mitigate environmental impacts, then the tax would be better. Make it really high and the incentive to invent technology rather than pay the tax is still there. However, that's a lot of things to screw up so maybe the cap-and-trade is better in practice. And I agree that environmental entrepreneurism of the sort mentioned in that book and my blog posts I linked to would be very interesting to many ycnews readers.
- Prrometheus 19y ago
  “the general advantage of cap-and-trade is that it makes it profitable for entrepreneurs to innovate.” So does a tax. Innovating in green tech reduces your expenses on carbon tax. Some may complain that this is a reduction in costs instead of an increase in revenue, but the two are equivalent. The entrepreneur can also sell his green tech to other businesses who want to avoid heavy carbon taxes.
  - Alex3917 19y ago
    Let's say you have two companies. It costs company A 500 dollars per ton of emissions eliminated. It costs company B 100 dollars per ton of emissions eliminated. Under a cap-and-trade system, company A can pay company B to reduce its emissions twice as much. This way you reduce the total amount of carbon dioxide pollution by the same amount as creating a tax would, but it is much more economically efficient. My understanding is that this doesn't work under a carbon tax. Again though, the environment/economics aren't really my areas of expertise.

Alex3917 19y ago

Well I don't want to speak for him, but I think the general advantage of cap-and-trade is that it makes it profitable for entrepreneurs to innovate. When you give money to the government it basically gets stolen, whereas under cap-and-trade the money goes directly the entrepreneurs who come up with the solutions. The book is actually all about the policies that most help entrepreneurs. To quote from the introduction: "A level playing field. That is what these venture capitalists and innovators require-- not assurances of profits but enough of a fighting chance to make the huge risks they are taking reasonable. Many still will not succeed. Those who do will need enormous ingenuity and doggedness to make their inventions work at a marketable price." I think most news.yc readers would actually love the book.

pchristensen 19y ago
True, in practice if the carbon tax was used as a revenue source (or even revenue neutral - basically letting you cut taxes somewhere else), then the incentive would be to make it too low to be either a good pollution deterrent or an entrepreneurial incentive. Sort of like how the gas tax is in the US. In European countries (Japan too?), the gas tax is 10-20x as high was here and their auto and energy industries are very different because of that. If the carbon tax was high enough (possibly higher than the amount that would maximize taxes collected) and the collected money was used to mitigate environmental impacts, then the tax would be better. Make it really high and the incentive to invent technology rather than pay the tax is still there. However, that's a lot of things to screw up so maybe the cap-and-trade is better in practice. And I agree that environmental entrepreneurism of the sort mentioned in that book and my blog posts I linked to would be very interesting to many ycnews readers.
Prrometheus 19y ago
“the general advantage of cap-and-trade is that it makes it profitable for entrepreneurs to innovate.” So does a tax. Innovating in green tech reduces your expenses on carbon tax. Some may complain that this is a reduction in costs instead of an increase in revenue, but the two are equivalent. The entrepreneur can also sell his green tech to other businesses who want to avoid heavy carbon taxes.
- Alex3917 19y ago
  Let's say you have two companies. It costs company A 500 dollars per ton of emissions eliminated. It costs company B 100 dollars per ton of emissions eliminated. Under a cap-and-trade system, company A can pay company B to reduce its emissions twice as much. This way you reduce the total amount of carbon dioxide pollution by the same amount as creating a tax would, but it is much more economically efficient. My understanding is that this doesn't work under a carbon tax. Again though, the environment/economics aren't really my areas of expertise.