Comments for Carbon Tax or Carbon Trading? at http://www.theenergyindependent.com , comment 1 to 1 out of 1 comments http://www.theenergyindependent.com Mon, 13 Oct 2008 22:43:42 +0100 FeedCreator 1.7.2 http://www.theenergyindependent.com/backgrounders/carbon-tax-or-carbon-trading.html#comment-6 Until the US jumps on-board with rest of the world for carbon-caps, I think RECs will continue to strengthen their reputation as the pollution "off-setter" in the US (Whole Foods has offset their entire operation with wind-power RECs for example). I wrote about RECs in more detail here. In terms of pricing carbon credits, I think the price should be structured by making it more expensive to purchase the credits than it is modify your industrial systems to lower emissions on a DCF (discounted cash flow) basis. This would be a little more complex as the needs and costs to change systems vary by industry, but it would incentivize industries to change quicker. While it is a terrific idea that governments would use the tax revenue to pay for research and development in alternative energy/emissions systems, we have seen what the US govt has done with the majority of its tax revenue (Iraq). Influencing the bottom line of greedy companies might be a better way to get them to jump on-board the "green" wagon. Simply put, if purchasing carbon credits will cost a company $20 in present value for the next 5 year, but installing new systems to reduce carbon emissions will cost them $15-$20 in present value, plus they have the right to sell excess carbon credits and claim "green" company status, I do not see why they wouldn't opt for the purchase. This can be compared to a rent vs. buy situation most encounter when considering a purchase of a new home. Rent could be cheaper today, but the price will change depending on the market. Purchasing a home locks you into a fixed (usually...) interest rate and allows you to predict your costs over time without volatility. There is a lot of money to be made in both the private and government sector here. The US is definitely leaving money on the table until we do. I comment regularly on the business/investor side of alternative energy on Energy Spin: Alternative Energy Blog for Investors-Served Daily Cheers, Francesco DeParis - Francesco DeParis Wed, 09 May 2007 08:01:42 +0100