Cap and Trade Charade?

The Financial Times' William Buiter has published a disturbing article outlining the Cap and Trade policy now moving through the U.S. House of Representatives. While on the face of it, he argues, the bill looks tough, it is, as he describes it

. . . a total con. It permits the US to increase CO2E emissions until 2020. The escape mechanism used - carbon offsets or carbon credits - suggests that for the period 2020 - 2050 also, the supposed intent of the Act - to reduce CO2E emissions in the US - will be neutered.

Buiter notes, accurately, that offsets are a feel-good measure with little basis in reality. Pollute away and plant a few trees and all is OK. They are the green equivalent of mark to model accounting -- they don't address the underlying reality, but everyone involved feels much better. As Buiter describes it, the House bill

. . . allows polluters to purchase up to 2bn tonnes a year in carbon “offsets”, over and above the total allowance provided by the permits of the Cap & Trade scheme. This 2bn-tonne annual offset allowance exceeds all the CO2E emission reductions envisaged between now and 2040!

This presents two dilemmas for Canada. First, emmisions do not respect borders. U.S. law thus directly affects Canada. And second, as the two economies are so tightly integrated we will face stiff pressure to follow the U.S. lead on this sham measure, whatever party forms the next government.