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 <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p> <o:p></o:p> One thing to keep in mind is that the point (ostensibly) of cap and trade is to reduce the emission of CO2, rather than to generate revenue by a tax.  The tax is really just a penalty for violating the CO2 emission limit set by congress.  So, in theory, we won’t be paying more, but rather, we will be consuming less in order to lower our contribution of CO2 emissions.  The threat of higher cost is the stick of the classic carrot and stick motivator.  The carrot is the planet being saved from ruin. <o:p></o:p> The simplest execution of the cap and trade objective would be to just set the CO2 limits and prosecute any violators, like a speed limit on the highway.  Set the limits high and gradually reduce them over a period of years, so all CO2 emitters could adjust their output downward at a manageable rate.  At the same time, the American people could adjust their lifestyle by reducing their heating and cooling, driving less, and modifying their diet.  This simple execution of the cap and trade objective would just be called, cap. <o:p></o:p> But cap and trade, as it is being advanced, is more complex than the simple execution of cap.  First it focuses on the entire quantity of atmospheric CO2, and how much that quantity needs to be reduced.  Then it divides up the responsibility of reducing it equally.  So producing CO2 then becomes a fundamental human right, which is equally apportioned.  Some recipients of that right are producing less than what they are allowed, and some are producing more than what they are allowed.  If those exceeders cannot reduce to what they are allowed, they have the option of purchasing the unused portion of the right to produce CO2 from those who are producing less than what they are allowed.  That is the trade of cap and trade.  It is the purchase of those excess CO2 rights (carbon credits) that adds cost to the big carbon emitters such as coal fired power plants, agriculture, and transportation.  The cost of the purchase is the what is being called the tax. <o:p></o:p> So the bill endows a gift to the low CO2 emitters in the form of excess emission allowance, which they can sell as if it were currency.  It raises a question of how those beneficiary businesses will be defined.  Businesses normally exist or don’t exist on the basis of whether or not they produce something for which there is a market, and are able to meet the market price.  Will it be possible to start a new low-capital business that happens to have a very low carbon footprint, but is really just a “front” business for the purpose of harvesting the lucrative carbon credits?   Could I officially start the low carbon GREEN VISIONS COMPANY, and receive a federal allotment of carbon credits, which I could sell to the power company for big bucks?             Considering this and other complications, there will have to be a mighty complex set of regulations developed to administer and manage all of these carbon credits and to determine how many are given free to businesses as their rightful allotment.  It seems like it would require something at least as complex as the IRS code right at the outset.  How much will businesses have to pay for experts just to manage their compliance with this new set of regulations?  How much will the trading companies charge for managing the trades?  How much will the government charge for administering its end of the regulations?
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