Wednesday, August 8, 2012

Do environmentalists cause pollution?

Carbon credits, designed as a payment to companies who reduce pollution, instead have the opposite effect.
So since 2005 the 19 plants receiving the waste gas payments have profited handsomely from an unlikely business: churning out more harmful coolant gas so they can be paid to destroy its waste byproduct. The high output keeps the prices of the coolant gas irresistibly low, discouraging air-conditioning companies from switching to less-damaging alternative gases. That means, critics say, that United Nations subsidies intended to improve the environment are instead creating their own damage.

The problem can easily be understood using marginal analysis: pollution credits increase the marginal benefit of producing the harmful coolant. This increases supply, which reduces the price, which encourages more coolant consumption.

When the developed world (UN & EU) threatened to cut off the pollution credits, China and India threatened to release the gas into the atmosphere.  This is an interesting bargaining ploy that works only if the developed world cares more about the pollution than India and China.   

No comments:

Post a Comment