Some of you may have seen the op-ed that Dr. Jones and I wrote for the Des Moines Register regarding the Gov. Reynolds’ carbon task force.
You may have also seen that the U.S. Senate passed the "Growing Climate Solutions Act," which will use public funds to create certification programs for agriculture and forestry “markets." I am writing to clarify what these programs do, why it is not appropriate to call them markets, and the potential challenges they signal for a real economy-wide climate change mitigation policy.
Markets exist because people want to obtain scarce resources. In the case of greenhouse gas (GHG) emissions, for a market to function, the government has to impose a maximum emission amount (the cap in cap and trade). This creates an artificial scarcity that serves to jumpstart the market. Without a cap, there is no reason to trade pollution credits, because pollution is not restricted.