Greenspan Has 'Grave Doubts' about 'So-Called Cap-and-Trade System on CO2 Emissions'
The media have really latched on to Alan Greenspan and his new book, â€śThe Age of Turbulence.â€ť Greenspan has appeared in all the major newspapers; heâ€™s on the cover of Newsweek, been on â€ś60 Minutesâ€ť and he even made an appearance on Comedy Centralâ€™s â€śThe Daily Show.â€ť
But whatâ€™s gotten very little attention is Greenspanâ€™s criticism of global warming policies as such as cap-and-trade systems and carbon taxes.
â€śCap-and-trade systems or carbon taxes are likely to be popular only until real people lose real jobs as their consequence,â€ť Greenspan wrote.
â€śYet as an economist, I have grave doubts that international agreements imposing a globalized so-called cap-and-trade system on CO2 emissions will prove feasible,â€ť Greenspan wrote.
Greenspan wrote the size of the cap in the system is its â€śAchillesâ€™ heel.â€ť He pointed to the European Unionâ€™s failure to make a meaningful difference with its cap-and-trade system.
â€śThe European Commission reported in May 2006 that the EUâ€™s original fifteen members would cut emissions by 2010 by only 0.6 percent compared with 1990 levels,â€ť wrote Greenspan. â€śThe Kyoto Protocol target is 8 percent by 2012. When that face emerged, the price of permits fell by two-thirds. The system inconvenienced very few.â€ť
Greenspan is also not a believer that carbon taxing is a positive means to fight global warming, a method favored by some in Congress. â€śA carbon tax might not be job-destroying if it were uniform across the globe, but I am skeptical that such uniformity is even remotely feasible,â€ť he said.
Still, Greenspan said he believes global warming is a threat and joked that we might have to change the name of Glacier National Park if the glaciers disappear. He warned of rising sea levels and adverse weather conditions and their impact on economies.
But he was blunt about how proposed policies could harm the economy.
â€śThere is no effective way to meaningfully reduce emissions without negatively impacting a large part of an economy,â€ť Greenspan wrote. â€śNet, it is a tax. If the cap is low enough to make a meaningful inroad into CO2 emissions, permits will become expensive and large numbers of companies will experience cost increases that make them less competitive. Jobs will be lost and real incomes of workers constrained.â€ť
So whatâ€™s Greenspanâ€™s best solution? He said nuclear energy is the best solution, but Gore and others on the left oppose nuclear power to some extent. When Gore unveiled his global warming plan in New York on Sept. 18, 2006, he said â€śnuclear power inevitably raises questions of nuclear arms proliferation.â€ť
â€śNuclear power is a major means to combat global warming,â€ť Greenspan wrote. â€śIts use should be avoided only if it constitutes a threat to life expectancy that outweighs it gains it can give us. By that criterion, I believe we significantly underuse nuclear power.â€ť