Wednesday, August 23, 2006

Ignatieff's Environmental Policy Part II: Industrial Emissions

Setting caps for emissions for given industries is an excellent idea. It attaches a cost to polluting above a certain level (thereby internalizing the externality), allows more innovative companies to lower costs and sell their pollution credits, and, with a decreasing cap, will ultimately lower pollution.

This is Kyoto without the problems. It's an enforceable, market-based system that will decrease pollution in the most effective way possible. The Kyoto protocol has the right idea, but, as with most international law, the lack of enforcability weakens it (not to mention Russian deindustrialization monkeying with the numbers).

Market-based approaches are indeed the answer. Greenhouse gas emissions must be lowered, but tey must be done so at the lowest cost.


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