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The (Carbon) Tax Man Cometh

Shikha Dalmia
October 19, 2008, 7:57pm

Sen. Barack Obama has been promising to impose a cap-and-trade scheme on America to cut greenhouse gas emissions as soon as he is elected. "[N]o business will be allowed to emit any greenhouses gases for free," Obama stumps. "Businesses don't own the sky, the public does, and if we want them to stop polluting it, we have to put a price on all pollution." O.K. Fine. But can the economy afford the equivalent of a giant carbon tax when it is already in meltdown mode? The Big Oracle's answer is that it most assuredly can. Because, you see, increasing the price of carbon will force a search for alternative fuels and more fuel-efficient technologies creating nothing short of 5 million new green jobs. By that logic, why stop at greenhouse gas emissions? Why not tax other human discharges? How about a flush tax? But if BO is right, then Europe's economy must be soaring after two years of cap-and-trade, right? A flood of new green jobs must have made Europe's nasty unemployment rates a thing of the past? All the countries that signed up for the scheme must be clamoring for more? And those that originally passed up must be kicking themselves for having missed out on the green bonanza? Er, no – not exactly. According to BBC News, with a recession looming, European authorities are facing a mini-revolt from countries unable to deliver on the emission cuts they had agreed to. Italy and Poland have threatened to block a package that would have forced them to derive 20% of energy from renewable sources. "Our businesses are in absolutely no position at the moment to absorb the costs," Italian Prime Minister Silvio Berlusconi has declared. So here is some advice for BO: upon assuming office – take a long, extended, fact-finding trip to Europe. Maybe even eight years long. P.S. The same advise would apply to the John McCain too who also favors cap-and-trade, except that his chances of getting elected don't seem so hot right now.

Shikha Dalmia is Senior Analyst


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