Now, I know this is the last thing you wanna hear, but the future of our planet is at stake, so we gotta take the time to understand what’s going on here. OK, meet the guys at the heart of this so-called solution. They include the guys from Enron who designed energy trading, and the Wall Street financiers like Goldman Sachs who gave us the subprime mortgage crisis. Their job is to develop brand new markets. They stake their claims and then when everyone and their grandmother wants in, they made off with huge amounts of money as the markets becomes a giant bubble and bursts. Well, their latest bubble just burst, and now they have a new idea for a market, trading carbon pollution. They’re about to develop a new three-trillion-dollar bubble, but when this one bursts, it won’t just take down our stock portfolios, it could take down everything. 

So how does cap and trade work? Well, pretty much all serious scientists agree that we need to reduce the amount of carbon in the atmosphere to 350 parts per million if we want to avoid climate disaster. In the US, that means reducing our emissions by 80%, maybe even more by 2050. 80%! Now the problem is that most of our global economy runs on burning fossil fuels which releases carbon: the factories that make all our staffs, the ships and trucks that carry it around the world, our cars and buildings and appliances, just about everything. So how are we gonna reduce carbon 80% and not go back to live in like little house on the prairie? Well, these cap and trade guys are saying that a new carbon stock market is the best way to get it done.

The first step would be getting governments around the world to agree on a yearly limit on carbon emissions. That is the cap. I think that part is great. So how do they wanna ensure that carbon emission stay under the cap? Well, governments would distribute a certain amount of permits to pollute. Every year there would be fewer and fewer permits as we follow the cap to our goal. Innovative companies will get on board, building clean alternatives and getting more efficient. As permits get scarcer, they will also become more valuable, so naturally companies who have extra will want to sell them to companies who need them. That’s where the trading comes in.

The logic is that as long as we stay under the cap, it doesn’t matter who pollutes and who innovates. We’ll meet our climate deadline, avoiding catastrophe. And oh yeah, these guys take the fee as they broker this multi-trillion carbon racket, I mean market.

Save the planet, get rich, what’s not to like? Some of my friends really care about our future support cap and trade. A lot of environmental groups that I respect do too. They know it’s not a perfect solution, and they don’t love the idea of turning our planet’s future over to these guys, but they think that it’s an important first step and that it’s better than nothing. I’m not so sure, and I’m not the only one.