Tax or Cap and Trade? No!! Tax AND Cap and Trade!

Recently it has become fashionable in the environmental community to argue the merits of taxing energy versus cap and trade schemes. This is at best a waste of, well, energy and at worst counterproductive to environmentalists' ends. Both taxing and cap and trade have their merits and in no way are they mutually exclusively. After years of trial, Europe is trying to get through the many complexities of cap and trade. But before the concept of cap and trade was developed they had high energy taxes. And as a result of that tax structure Europeans per capita use half the energy that Americans do.

It has been said of energy taxes that they would end up being just as complex as cap and trade. That depends on where they are applied. The tax that more Americans pay more often and with less hassle than any other is an energy tax. We pay that tax every time we buy gas at the pump. Cap and trade to regulate auto emissions would be a nightmare whereas taxing gasoline is demonstrably the simplest of solutions. On the other hand cap and trade might be the best solution to curtail industrial carbon emissions.

In the end everyone in the environmental community thinks that energy taxes work; they just think they are not politically feasible. If people in the environmental community don’t think energy taxes are feasible, they are right. They are right precisely because they don’t think they are feasible. If the people who every day are telling us we are on the verge of an environmental apocalypse won’t support this fast effective tool to fight global warming then no one will. If environmentalist question the feasibility of energy taxes then the debate should center around how to make them feasible not how to abandon them.

Who then is the winner tax or cap and trade debate? Why it’s Exxon Mobil.