Global Policy Forum

Carbon Tax Should Replace Carbon Trading to Curb Climate Change, Says US Mayor Bloomberg

Associated Press
December 13, 2007

New York City Mayor Michael R. Bloomberg, at a U.N. climate conference drawing hundreds of emissions traders, said Thursday the growing carbon cap-and-trade industry is vulnerable to "special interests, corruption, inefficiencies," and should be replaced by straight carbon taxes.

Speaking of global warming, Bloomberg said, "Most experts would agree that the way to solve the problem is with a carbon tax."

The Kyoto Protocol, requiring 37 industrial nations to reduce carbon dioxide and other industrial, transportation and agricultural emissions, has given rise in Europe and elsewhere to carbon cap-and-trade systems, under which businesses that don't use up quotas of emission allowances sell them to others who need them to overshoot their ceilings.

That in turn has given rise to a multibillion-dollar global industry of brokers, analysts and project managers dealing in such carbon credits and "green" projects that produce them.

The two-week U.N. conference, ending Friday, has attracted more than 300 participants from one emissions-trading association alone. The meeting is to establish a negotiating track for a new agreement to succeed Kyoto when it expires in 2012.

Bloomberg, who addresses the conference Friday as a representative of the world's local governments, told a meeting with environmentalists Thursday that carbon trading "is attractive to many politicians because it doesn't have that three-letter word 'tax'."

"But it's a very inefficient way to accomplish the same thing that a carbon tax accomplishes," he said. "It leaves itself open to special interests, corruption, inefficiencies."

Some environmentalists complain the process has been corrupted by projects in the developing world awarded more carbon credits than they deserve, and has become unduly influenced by financial companies that have jumped into the action in a big way.

Many environmentalists say a carbon tax — heavy government levies on coal, oil and other fossil fuels — is a better, more direct way to discourage global-warming emissions, and to finance environmentally friendly policies and technology.

"You really want to tax the coal producers in a way that coal producers could reduce that tax by investing in technology and in ways to make coal a cleaner-burning, less polluting fuel," Bloomberg said.

He said most experts would agree that carbon taxes are "a very difficult political lift," since they would probably boost costs for energy consumers.

"But that's what leadership is all about, and we need leaders around the world who get things done," the New York City mayor said.

At the conference Friday, Bloomberg is expected to tout his new plan to reduce global-warming emissions in New York City by 30 percent by 2030 by, among other measures, improving energy efficiency in buildings, requiring taxi fleets to convert to hybrid vehicles, and levying a fee on drivers entering Manhattan business districts.



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