An Inconvenient Comparison: Should Oregon Trust Europe’s Model of CO2 Trading?

January 23, 2007 0

Introduction

Carbon trading programs have recently been implemented in Europe, and proposals for other regional schemes have been discussed in other jurisdictions. Carbon trading is grounded in sound theory, yet it is subject to numerous implementation problems. Market-based carbon trading programs, while providing some level of economic efficiency, suffer from a number of disadvantages compared to other carbon-reduction schemes. The European experience to date provides an excellent opportunity to investigate the costs and benefits of climate policy and establish whether or not Oregon should seek to enter into an agreement to trade carbon permits. While many would like to see the state take this step, the low carbon intensity of Oregon’s power generation makes meaningful reductions in carbon dioxide emissions within the state very difficult. The potential, yet uncertain payoffs, from moving ahead at this time do not warrant incurring the substantial costs and limited benefits such a program would provide for Oregon.


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About the author: Scott McCormick teaches economics, environmental science and chemistry at the prestigious Peddie School in Hightstown, New Jersey. He has a Bachelor of Science degree in Land Use and Environmental Studies from the University of Saskatchewan and a Master’s degree in Resource Management from Simon Fraser University. Mr. McCormick was a 2006 summer research associate at Cascade Policy Institute, a think tank based in Portland, Oregon. He thanks Cascade Policy Institute for the opportunity to do this research, the Peddie School administration for supporting this professional development opportunity, and Cascade President John A. Charles, Jr., Dr. Michael Barton and Kathryn Hickok for their review.

About Cascade Policy Institute: Founded in 1991, Cascade Policy Institute is Oregon’s premier policy research center. Cascade’s mission is to explore and promote public policy alternatives that foster individual liberty, personal responsibility and economic opportunity. To that end, the Institute publishes policy studies, provides public speakers, organizes community forums and sponsors educational programs.

Cascade Policy Institute is a tax-exempt educational organization as defined under IRS code 501(c)(3). Cascade neither solicits nor accepts government funding and is supported by individual, foundation and business contributions. Nothing appearing in this document is to be construed as necessarily representing the views of Cascade or its donors, or as an attempt to aid or hinder the passage of any bill before any legislative body. The views expressed herein are the author’s own. Copyright 2007 by Cascade Policy Institute. All rights reserved.

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