“Yes we can” was the cry by President Obama in his many campaign speeches to his followers. Now, acknowledging that they are one of the major polluters in the world, he is looking to address the impact of his country on carbon pollution.
In a recent speech to the US Congress, the President said: “To truly transform our economy, to protect our security and save our planet from the ravages of climate change we need to ultimately make clean renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America”.
To support that innovation they plan to invest US$15 billion pa to develop technologies including wind and solar power, biofuels, clean coal and fuel efficient vehicles.
He could not have been more forceful about his commitment. It was top of his list of priorities: “The only way this century will be another American century is if we confront at last the price of our dependence on oil”, he said.
It is a truly radical policy. Europe has had a limited cap and trade system for years but what Obama is proposing is an economy-wide system.
The idea is this: the government sets a cap, a limit, on the total amount of carbon dioxide that can be emitted. It then issues permits to emit that carbon dioxide into the atmosphere. The permits can be bought and sold on a market – that’s the trade bit – and companies can only emit carbon dioxide if they buy a permit.
The reason President Obama supports cap and trade is because it harnesses carbon reduction to the most powerful motivating force ever developed – the power of capitalism, the power of human ambition.
Businesses won’t seek to cut carbon emissions to save the earth, however, they will do it because it will save them money and therefore increase their profits. Cap and trade creates the “carbon price” because it makes emitting carbon just another cost in a business’ production process.
Just think how powerful a change that could be. What it does is enforce the principle that the polluter should pay for the damage they create. How’s that for a revolutionary idea?