Cap-and-trade: smoke-and-mirrors

The 2015 United Nations Climate Change Conference in Paris begins next week.  To prime yourself for this shindig, read here how Mr. Mark Steyn, author of A Disgrace to the Profession, challenges the science behind the “hockey stick” graph.  It is suppose to show beyond a shadow of a doubt the earth is warmer now than it has been in the last thousand years.  The arm represents stable temperatures; the blade shows the supposed spike in “global warming.”

To cover the periods where there were no recorded temperatures, tree ring studies are used.  Interesting things happen when the ring studies are combined with temperatures.  It is one of the reasons Climategate is an à propos term for “global warming.”

This may cause alarm bells to go off in your head, given the Canadian government announced taxpayers are on the hook for $2.65 Billion in aid for developing countries to fight climate change.  (Hmm, that didn’t come up in the many “conversations” with voters.)  And, the feds along with some (or all) of the provinces are determined to bring in a cap-and-trade scheme to reduce, in theory, greenhouse gas (GHG) emissions.

Yes, in theory indeed:

  • Government sets a decreasing limit or cap on annual greenhouse gas (GHG) emissions for industry.
  • Government auctions off carbon credits or allowances to a company that total the cap.  (1 credit = 1 tonne of industrial GHG emissions or its equivalent)
  • A company can burn GHG up to the allowable limit.  If they do not have enough credits to cover their emissions, they must either reduce their emissions or buy another company’s unused credits; hence the name, cap-and-trade.
  • Credits can either be sold or banked for future use.
  • Consumers pay higher prices to cover industry’s cost of credits.


Reality paints a different picture:

“The European Union (EU) created its own cap-and-trade, Emissions Trading Scheme (ETS) in 2005. CO2 Emissions have fallen, but not as fast as they have in the U.S., where no such scheme exists and where population and economic growth has been faster.  The results of EU cap-and-trade are obvious: residential electricity prices per kilowatt hour…Denmark (42 cents), Germany (40 cents), Spain (31 cents), and UK (25 cents), compared to the U.S. (12.5 cents).”1

“Cap and trade is vulnerable to insider manipulation, political corruption, fraud and organized crime, all of which happened in the world’s largest cap-and-trade market, the European Union’s decade old Emissions Trading Scheme.  These problems caused the market price of carbon credits to repeatedly crash, making it cheaper for companies to buy permits (credits) than reduce emissions.”2

Is your head getting itchy?

If not, remember Mr. Jeffrey Skilling, former CEO of the defunct company, Enron?  In Enron’s heyday, he had this to say about cap-and-trade:  “We are a green energy company, but the green stands for money.”



1. Clemente, Jude. 2015.  “Cap-And-Trade Is Fraught With Fraud,” Forbes Magazine, October 1.

2. Goldstein, Lorrie. 2015.  “Premier Wynne’s Carbon Plan Doomed to Fail,” Toronto Sun, April 15.


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